Insights Competition and Markets Authority publishes interim report on its market study into UK mobile ecosystems

The CMA has published an interim report in connection with its market study into mobile ecosystems. The study was launched in June 2021 to assess potential sources of harm to consumers within four broad themes:

  • competition in the supply of mobile devices and operating systems;
  • competition in the distribution of mobile apps;
  • competition in the supply of mobile browsers and browser engines; and
  • the role of Apple and Google in competition between app developers.

The report sets out the CMA’s initial findings, the concerns that it has identified, and the range of potential interventions it has identified that could address them.

Key findings include:

  • Apple and Google have been able to leverage their market power to create largely self-contained ecosystems, which make it difficult for any other firm to enter and compete meaningfully;
  • app developers also have to comply with Apple and Google’s rules for access to their app stores, which some say are overly restrictive; developers are required to accept these terms in order to reach users, which can include paying 30% commissions to Apple and Google; and
  • whilst acknowledging that considerations, such as security, quality of service and the safeguarding of users’ personal information are very important, the CMA is concerned that Apple and Google are making decisions on these grounds that favour their own services and limit choice.

The report also sets out a range of actions that could be taken to address these issues:

  • making it easier for users to switch between iOS and Android phones when they want to replace their device without losing functionality or data;
  • making it easier to install apps through methods other than the App Store or Play Store, including so-called “web apps”;
  • enabling all apps to give users a choice of how they pay in-app for things like game credits or subscriptions, rather than being tied to Apple’s and Google’s payment systems; and
  • making it easier for users to choose alternatives to Apple and Google for services like browsers, in particular by making sure they can easily set which browser they have as default.

The report also finds that Apple and Google would meet the criteria for “Strategic Market Status” (SMS) designation for several of their ecosystem activities, as set out in the Government’s proposals on creating a new pro-competition regime for digital markets (on which the Government has consulted and is currently analysing the responses).

If the proposals become law, the Digital Markets Unit (DMU), which will sit within the CMA, will ultimately be responsible for deciding which big tech firms get SMS status. Therefore, the CMA’s current view is that the firms’ market power in this area will be best dealt with through the DMU.

Alongside its interim report, the CMA has also published a notice of its decision not to make a market investigation reference under s 131 of the Enterprise Act 2002. The CMA stresses that this decision should not be interpreted as the CMA not having any competition concerns in this sector.

The CMA is inviting comments on its interim report by 5pm on 7 February 2022. To access the report, click here. To read the CMA’s press release in full, click here.