The Competition and Markets Authority has launched strategic market status 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.
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 three hours a day using a mobile device.
People use these devices to browse the internet, shop, play and consume content, while millions of businesses across the economy use mobile devices, for example to communicate with customers, manage orders and take payments.
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 £28bn. 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.
Anti-trust regulator the CMA says it is important that these markets work well for all businesses, large and small, to create maximum opportunities for growth, investment and innovation across the UK economy.
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.
The CMA says it is critical that competition works well as it ensures 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.
This may include AI products and services, contactless payments provided through digital wallets, and new types of apps – such as ‘super apps’ and web apps – accessed through a mobile browser. This could in turn support sustained growth opportunities in the parts of the economy that rely on mobile ecosystems.
Under the digital markets competition regime, the CMA may designate firms with SMS in relation to a particular digital activity. Once designated, the CMA can impose conduct requirements or propose pro-competition interventions to achieve positive outcomes for UK consumers and businesses.
The 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.
It will look at barriers that may be preventing competitors from offering rival products and services on Apple’s and Google’s platforms; whether they are using their position in operating systems, app distribution or browsers to favour their own apps and services; and whether they are requiring app developers to sign up to unfair terms and conditions.
Potential conduct requirements 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.”