by Tim Hardwick
UK regulators on Thursday launched an investigation into Apple and Google’s smartphone ecosystems to assess whether they have “strategic market status” (SMS), a designation that if imposed would subject the companies to specific conduct requirements set by the Competition and Markets authority (CMA) to improve competition.
The investigation will look at the companies’ operating systems, app stores and browsers that operate on mobile devices, and the impact they have on users and on businesses developing content and services such as apps for iOS and Android devices. According to the CMA’s press release, the issues that will form part of the CMA’s investigations include:
- The extent of competition between and within Apple’s and Google’s mobile ecosystems. The CMA will assess how competition is working across 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. This will include investigating whether Apple or Google are using their position in operating systems, app distribution or browsers to favour their own apps and services, which often come pre-installed and prominently placed on iOS and Android devices.
- Potential exploitative conduct. This will include investigating whether Apple or Google are requiring app developers to sign up to unfair terms and conditions as a condition of distributing their apps on Apple’s and Google’s app stores; and whether users may be presented with ‘choice architecture’ which makes it difficult to make active choices about which apps they are using on mobile devices.
If deemed to have SMS designation, the potential conduct requirements the companies would have to comply with could include, for example, requiring Apple or Google to open up access to key functionality needed by other apps to operate on mobile devices, or making 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.
Sarah Cardell, chief executive of the CMA, said:
“The operating systems, apps and browsers installed on our phones and tablet devices act as our gateway into the digital world – whether that is communicating with our friends and loved ones, buying from businesses or accessing creative content.
“More 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.”
This is the second announced SMS investigation in as many weeks, the first of which is looking into Google Search’s approximately 90% market share. The CMA said at the time that a second one would be coming this month, and now we have it. The CMA can impose significant fines for non-compliance, including up to 1% of a firm’s annual worldwide turnover, with additional penalties for continued noncompliance. Individuals in senior management positions may also face fines or disqualification from serving as directors.
The probe will take no more than nine months, and the statutory deadline for both investigations is October 22, 2025. The investigations are separate to the CMA’s ongoing market investigation into mobile browser and cloud gaming restrictions put in place by both Apple and Google.
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