IP Law Daily, TECHNOLOGY/INTERNET NEWS: UK’s CMA investigating Apple and Google’s mobile ecosystems, (Jan 29, 2025)

By Peter Reap, J.D., LL.M.

If the investigations lead to SMS designations, the CMA can impose conduct requirements or propose pro-competition interventions.

The UK’s Competition and Markets Authority (CMA) has launched strategic market status (SMS) investigations in a second area of digital activity: mobile ecosystems. Two investigations – one into Apple and another into Google – will assess in parallel these firms’ position in their respective ‘mobile ecosystems’ which include the operating systems, app stores and browsers that operate on mobile devices. The investigations will explore the impact on people who use mobile devices and the thousands of businesses developing innovative services or content such as apps for these devices, the antitrust enforcer announced.

New UK competition regime and SMS designations. Earlier this month, the CMA announced its initial plans for a new competition regime regarding digital markets beginning in 2025. The Digital Markets, Competition and Consumers Act (DMCC), which received Royal Assent in May 2024, imposes new responsibilities on the CMA. The key feature of the scheme is the CMA's designating very large entities as having Strategic Market Status (SMS) regarding a particular digital activity. A separate guidance document published by the CMA sets out in detail how the new regime enables the CMA to promote competition in fast-moving digital markets, while protecting UK consumers and businesses from unfair or harmful practices by the very largest technology firms.

Analogous to the Digital Markets Act's "gatekeeper" designation is the DMCC Act's SMS designation. Companies that provide services on the Internet will be considered for SMS regarding a particular digital activity if the company (1) has revenue turnover of £1 billion in the UK or £25 billion worldwide in the preceding 12 months; (2) wields substantial and entrenched market power; and (3) is postured in a position of strategic significance.

Mobile ecosystems. According to the CMA, mobile devices such as smartphones and tablets play a fundamental role in the lives of people in the UK. Almost all (94%) of 16+ year olds in the UK – around 56 million UK consumers – currently have access to a smartphone and the average UK user spends around 3 hours a day using a mobile device.

Almost 15,000 businesses are involved in the development of apps used on mobile devices in the UK, and the total UK revenue for app development is estimated to be around £28 billion. Many other businesses are seeking to bring forward technological developments on mobile devices like digital wallets, as well as connected devices like headphones and smart watches which work with mobile devices.

Virtually all mobile devices sold in the UK are pre-installed with either iOS (Apple) or Android (Google) and Apple’s and Google’s own app stores and browsers have either exclusive or leading positions on their platforms compared to alternative products and services. This means Apple and Google are also able to exert considerable influence over much of the content, services and technological development provided on a mobile device.

Given the importance of mobile ecosystems to people, businesses and the economy, it is critical that competition works well. Effective competition could ensure consumers and businesses are treated fairly by Apple and Google in relation to the terms and conditions they impose. Effective competition could also ensure open opportunities for businesses to innovate and deliver a range of content, services and technological developments to consumers on a mobile device.

Investigation parameters. The CMA’s investigations will assess Apple’s and Google’s position in relation to their mobile operating systems, app stores and browsers (together referred to as ecosystems) and whether either firm has SMS in these areas. At the same time the CMA will also consider whether conduct requirements should be imposed in the event of a final designation decision.

The investigations will examine:

• The extent of competition between and within Apple’s and Google’s mobile ecosystems, and what barriers may be preventing other competitors from offering rival products and services on Apple’s and Google’s platforms.

• Possible leveraging of Apple’s and Google’s market power into other activities, such as whether the companies are using their position in operating systems, app distribution or browsers to favor their own apps and services.

• Whether Apple or Google are requiring app developers to sign up to unfair terms and conditions; and whether users are hampered in making active choices about which apps they are using on mobile devices.

The findings of the investigations could potentially result in the CMA requiring Apple or Google to open up access to key functionality needed by other apps to operate on mobile devices; or to make it possible for users to download apps and pay for in-app content more easily outside of Apple’s and Google’s own app stores, the announcement said.

Cardell comments. Sarah Cardell, chief executive of the CMA, said that “[m]ore competitive mobile ecosystems could foster new innovations and new opportunities across a range of services that millions of people use, be they app stores, browsers or operating systems. Better competition could also boost growth here in the UK, with businesses able to offer new and innovative types of products and services on Apple’s and Google’s platforms.”

Companies: Apple Inc.; Google LLC

News: TechnologyInternet