Apple and Google are in hot water with the UK competition regulator, the Competition and Markets Authority (CMA), following a year-long study which found that the two tech giants have an effective duopoly on the mobile browser ecosystem. Sanctions for the companies could follow, with the CMA also announcing it is launching separate enforcement action against Google in relation to its app store payment practices.
The study, which was published today, found that Apple and Google exercised a stranglehold over markets such as operating systems (OS), app stores and web browsers on mobile devices. The CMA has said that without interventions, both companies are likely to maintain and strengthen their position over these markets, further restricting competition and limiting incentives for innovators.
Why is the CMA investigating Apple and Google?
In its announcement, CMA says that 97% of all mobile web browsing in the UK in 2021 happened on browsers powered by either Apple’s or Google’s browser engine.
Apple and Google hold “all the cards” when it comes to how people use their mobile phones, said Dr Andrea Coscelli, chief executive of CMA. He added that while both companies do contribute good products and services to the market, they are shutting out competitors and “holding back” the UK tech sector.
“We all rely on browsers to use the internet on our phones, and the engines that make them work have a huge bearing on what we can see and do,” Dr Coscelli said. “Right now, choice in this space is severely limited and that has real impacts – preventing innovation and reducing competition from web apps. We need to give innovative tech firms, many of which are ambitious start-ups, a fair chance to compete.”
Apple also has a unique position where it bans alternatives to its own browser engine, Safari, on its mobile devices. CMA says this is a “concern” as it severely limits the potential for rival browsers to differentiate themselves from Safari and limits Apple’s incentives to invest in its browser engine.
Mobile devices typically have Google Chrome or Apple Safari browsers pre-installed and set as default at purchase. The CMA believes this gives them a key advantage over other rival browsers, and the announcement says the pair have a combined share of 90% of the mobile browser market.
Will the CMA take action against Apple and Google?
The CMA plans to take “immediate targeted action” against the companies, and has opened a consultation period with a view to launching a market investigation reference into mobile browsers, as well as access to cloud gaming on mobile devices. This will be an in-depth probe will be led by a group of experts drawn from the CMA’s panel of members, and is likely to last for 18 months.
According to CMA, market investigations consider whether there are features of a market that have an adverse effect on competition. If this is found to be the case, the CMA has the power to impose its own remedies, and could go as far as ordering the break-up of the companies on competition grounds. It can also make recommendations to other bodies such as sectoral regulators or the government if legislation could be required.
The consultation on the proposed market investigation reference will close on 22 July at 5pm.
Google faces Play Store investigation
The CMA has also launched a competition law investigation into Google’s rules governing apps’ access to listing on its Play Store, it said today. It will look at whether it is fair for the search engine giant to force app developers to use its system, Google Play Billing, for in-app payments. This means Google takes a cut of all purchases made on Android apps.
A similar investigation into Apple, in relation to payments on the Apple App Store, opened in March 2021 and is likely to run until at least October.
A spokesperson from Google said: “Android phones offer people and businesses more choice than any other mobile platform. Google Play has been the launchpad for millions of apps, helping developers create global businesses that support a quarter of a million jobs in the UK alone. We regularly review how we can best support developers and have reacted quickly to CMA feedback in the past. We will review the report and continue to engage with the CMA.”
An Apple spokesman said: “We respectfully disagree with a number of conclusions reached in the report, which discount our investments in innovation, privacy and user performance — all of which contribute to why users love iPhone and iPad and create a level playing field for small developers to compete on a trusted platform. We will continue to engage constructively with the CMA to explain how our approach promotes competition and choice, while ensuring consumers’ privacy and security are always protected.”