CMA 'must bring dominant US tech giants to heel - now'

The UK’s competition regulator should be given even stronger powers to fast track action against US technology giants and finally tackle their market dominance to increase innovation and help grow the British economy.

That is according to a new report from think tank The Institute for Public Policy Research (IPPR) which cites the example of how Apple and Google’s app stores are stifling UK businesses.

The Competition & Markets Authority first launched an investigation into Apple and Google’s mobile ecosystems, including operating systems, app stores and mobile browsers, back in 2021. But this was scrapped late last year after new legislation, the Digital Markets, Competition & Consumers Act, came into force. The CMA reopened the probe in January under this new law.

The move comes amid claims that the Government has been cosying up to US tech giants, with Science Secretary Peter Kyle leading a 70% “surge” in meetings with people in or close to firms like Google, Amazon and Meta, compared to his predecessor, The Guardian says.

Under the EU’s Digital Markets Act, which became applicable in May 2023, Apple and Google have already been forced to open up their app store platforms, including allowing developers to direct consumers to alternative payment options. In fact, Apple has already been fined €500m (£429m) for non-compliance.

Both firms charge a commission of between 15% and 30% for in-app purchases, and the IPPR said the companies were likely to generate between £1.5bn and £2.4bn in revenue from their app stores in the UK this year alone.

In contrast, it claimed that in a more competitive market, with a lower commission rate of around 12%, up to £1.4bn of revenue would shift from the two tech giants to app developers – money the IPPR argues could help UK-based developers with innovation, job creation and growth.

The IPPR also believes the CMA should be given the ability to speed up interventions against the biggest threats to consumers by focusing on big tech issues, and fast-track consumer harm cases to deliver quicker decisions.

It also called for the regulator to adopt a formal mandate on promoting growth and specifically targeting business practices that suppress wages or undermine smaller firms and their growth.

Some officials from within the administration of US President Donald Trump have previously criticised Europe and the UK over their regulation of US tech giants, particularly in the areas of competition and online safety, arguing US businesses are being unfairly targeted.

IPPR associate director for economic policy Dr George Dibb said: “Enforcing the UK’s competition rules isn’t anti-business – it’s a pro-business, pro-worker, pro-growth agenda.

“If we weaken those rules, we’re letting dominant firms and tech giants hold back innovation and investment. That’s money being extracted from British businesses and workers, and funnelled to monopolistic firms, often overseas.

“In the US, there’s a bipartisan consensus between Trump and Biden on confronting dominant firms through competition policy, with both taking legal action against Google and Facebook.

“The UK Government must back the CMA to act more decisively – to ensure our economy supports exciting new enterprises, not just entrenched incumbents.”

A Government spokesperson said: “This Government is determined to strengthen competition and protect consumers.

“That’s why we have introduced a new steer to the CMA and granted them new powers via recent legislation to promote more competitive digital markets to ensure consumers and businesses are treated fairly.”

A Google spokesperson said the report “fundamentally misrepresents” Google’s services, and added: “Android offers a choice of app stores for developers and has democratised access to smartphones, generating over £9.9bn in revenue for British developers and supporting over 450,000 UK jobs.”