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UK launches investigation into market power of Google and Apple

The UK government launched an investigation into Apple’s and Google’s mobile ecosystems over “concerns they have market power which is harming users and other businesses,” a press release by the country’s Competition and Markets Authority (CMA) stated. “These companies now hold an effective duopoly over mobile operating systems: in 2020, the Apple iOS share of mobile operating systems in the UK was 52% and the Google Android share was 48%,” the study’s statement of scope said.

“Apple and Google control the major gateways through which people download apps or browse the web on their mobiles – whether they want to shop, play games, stream music or watch TV. We’re looking into whether this could be creating problems for consumers and the businesses that want to reach people through their phones.” — Andrea Coscelli, Chief Executive of the CMA said

The study will be conducted over the next 12 months and the final report of this investigation will be published no later than 14 June 2022, CMA said. The authority is welcoming views from interested parties on the statement of scope by 26 July 2021.

The competition authority has already been investigating Apple’s App Store and Google’s Privacy Sandbox proposals, these existing studies will fall within the scope of the new study on mobile ecosystems, but the new one is “much broader”, the release stated. “Our ongoing work into big tech has already uncovered some worrying trends and we know consumers and businesses could be harmed if they go unchecked,” Coscelli said.

What is the UK investigation looking into?

The CMA launched this market study to understand whether Google’s and Apple’s effective duopoly over the supply of operating systems (iOS and Android), app stores (App Store and Play Store), and web browsers (Safari and Chrome) is stifling competition and resulting in consumers losing out. “The CMA is concerned this could lead to reduced innovation across the sector and consumers paying higher prices for devices and apps, or for other goods and services due to higher advertising prices,” the authority said. The investigation will study these four broad themes:

Competition in the supply of mobile devices and operating systems: The study will investigate if there are natural barriers to entry such as network effects and economies of scale in the supply of mobile operating systems. It will also study if Google and Apple are locking customers into their respective ecosystems and what barriers are they creating to do so.

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Competition in the distribution of mobile apps: The study will examine the amount of power Google and Apple have in the distribution of mobile apps and the extent to which there are suitable alternatives to the default app stores. It will also study if the two firms are using their power to exploit consumers and app developers. The study will also examine if the app review process is successful at preventing the distribution of harmful apps.

Competition in the supply of mobile browsers and browser engines: The study will examine the extent to which the two firms have market power in the supply of mobile browsers including an examination of potential barriers to entry for competitors. The study will also try to assess if Google’s and Apple’s positions in the supply of browsers allow them to gain an advantage in other parts of their mobile ecosystem.

The role of Apple and Google in competition between app developers: The study will explore the ways in which the two firms’ conduct as app store providers affects competition between app developers. It will examine if Google and Apple are using their position to launch competing apps and services and if these are favoured over third-party apps when showcased to consumers. CMA has put out a questionnaire for app developers asking them about their experiences in developing apps for iOS and Android and their experiences with the App Store and Play Store. The questionnaire covers subjects like the app review process, search rankings on app stores, and competition from Google’s and Apple’s own apps.

What are the potential outcomes?

The CMA is working on establishing a new pro-competition regulatory regime for digital markets, this investigation is expected to help in that front. The investigation’s statement of scope has identified four broad categories of intervention in case CMA finds out that the current market is not working well:

  1. Interventions that limit platforms’ ability to exercise market power: This includes measures that prevent or penalise exploitative or exclusionary conduct.
  2. Interventions to promote interoperability and common standards: This includes implementing measure that helps prevent consumer lock-in by enabling greater freedoms to switch between providers.
  3. Consumer choice remedies: The includes implementing measures that give consumers the ability to make informed choices between providers of content and services by giving them access to information and by giving them choices through the design architecture used in the selection of a service. This includes setting default settings, where necessary, in the interests of consumers.
  4. Separation remedies: This includes creating operational separation between platforms owned by the same company in order to diffuse the market power and functional separation of datasets in order to create a more level playing field.

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