The U.K.’s antitrust watchdog has given the clearest signal yet that interventions under an upcoming reform of the country’s competition rules will target tech giants Apple and Google — including their duopolistic command of the mobile market, via iOS and Android; their respective app stores; and the browsers and services bundled with mobile devices running their OSes.

So it could mean good news for third-party developers trying to get oxygen for alternatives to dominant Apple and Google apps and services down the line.

Publishing the first part of a wide-ranging mobile ecosystem market study — which was announced this summer — the Competition and Markets Authority (CMA) said today that it has “provisionally” found Apple and Google have been able to leverage their market power to create “largely self-contained ecosystems”; and that the degree of lock-in they wield is damaging competition by making it “extremely difficult for any other firm to enter and compete meaningfully with a new system”.

“The CMA is concerned that this is leading to less competition and meaningful choice for customers,” the watchdog writes in a press release. “People also appear to be missing out on the full benefit of innovative new products and services — such as so-called ‘web apps’ and new ways to play games through cloud services on iOS devices.”

The regulator said it’s also concerned consumers could be facing higher prices versus what they would have to pay in a more competitive market, including for Apple phones, app subscriptions and purchases made within apps.

The CMA’s study points to a now (very) familiar line-up of competition concerns attached to how the tech giants operate their platforms, and thereby maintain what its PR characterizes as a “vice-like grip” over mobile devices, including bundling services; self preferencing; restrictive T&Cs for third-party developers; and the 30% commission each platform can charge on some in-app payments. (Or what some irate third parties, such as Epic Games and Spotify, like to attack as the “Apple tax”; and Elon Musk has dubbed a “defacto global tax on the Internet”.)

Separately, the CMA is investigating Apple’s App Store following complaints from developers of unfair terms — although that investigation is taking place under current U.K. competition rules.

The regulator also has an ongoing intervention related to Google’s Privacy Sandbox proposals; aka the latter’s plan to deprecate Chrome’s support for tracking cookies and switch to alternative ad targeting technologies — which has raised the ire of advertisers worried the move will further increase Google’s market power. And the CMA is in the midst of consulting on accepting a set of commitments from Google which would include a monitoring trustee in a bid to reassure the wider market that it’s playing fair.

At the same time as this ongoing antitrust oversight of digital giants, the U.K. has an in-train plan to update competition rules — that’s aimed at addressing the market muscle of big tech. Specifically, ministers want to intervene to boost competition — proposing to tackle platform power through bespoke ex ante rules for tech giants.

But this major “pro-competition” digital reboot is still waiting the required legislation to get going. 

As it waits for new powers to tackle platform power, the CMA has been busy enhancing its understanding of digital market dynamics. And, indeed, familiarizing itself with the usual tech giant talking points vis-à-vis charges of monopolistic/anti-competitive behavior.

It also, of course, continues to hand down orders.

“Both firms argue that many of these controls are needed to maintain the security and quality of the overall service to their users, and in some cases to safeguard users’ personal information,” the regulator writes now, anticipating push-back to its early mobile duopoly conclusions.

“The CMA agrees that these considerations are very important but is concerned that Apple and Google are making decisions on these grounds that favour their own services and limit meaningful choice, when other approaches are available,” it warns.

Potential remedies for tackling anti-competitive behavior by the mobile duopoly considered in the report include:

• 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.
• 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 CMA is consulting on its initial findings — it’s soliciting market feedback by February 7, 2022.

Apple and Google were contacted for a response to the study. (See the base of this post for their remarks.)

Any actual U.K. antitrust intervention over the mobile duopoly looks to be on ice while the CMA waits for the competition reboot to kick in. And, specifically, for legislation to empower the Digital Markets Unit (DMU), which will be responsible for overseeing key parts of the incoming regime.

Although, in further remarks today, the CMA writes that its “work so far suggests” both Apple and Google would “meet the incoming criteria for ‘Strategic Market Status’ (SMS) designation for several of their ecosystem activities”.

Under the reform, SMS is the bar for ex ante competition interventions to kick in.

But the DMU will be responsible for making a final call on which tech giants meet that threshold. Although the unit (which got going earlier this year) sits within the CMA, and will be drawing on the regulator’s expertise and past work in the digital sphere, so wildly divergent views seem unlikely.

SMS status will lead to Apple and Google facing “legally enforceable codes of conduct to govern their behaviour and to prevent them from exploiting their powerful positions”, the CMA writes now.

“With this in mind, the CMA’s current view is that the firms’ market power in this area will be best dealt with through the DMU, which the government has recently proposed powers for,” it goes on, also noting it’s awaiting stronger competition and consumer law powers from the government (also recently consulted on).

The CMA’s announcement also references the two aforementioned big tech probes, into Apple’s App Store and Google’s Privacy Sandbox, with the regulator noting: “While both examine issues falling within the scope of this study, this work into mobile ecosystems is much broader. The CMA will adopt a joined-up approach across all these related cases, to ensure the best outcomes for customers and other businesses.”

It also hasn’t finished its deep dive into the mobile ecosystem: A second half of the study is ongoing, with the CMA expecting to publish a final report in June 2022.

Whether the U.K.’s competition reboot will have been done and dusted by the middle of next year — meaning the DMU and CMA would be empowered to take steps to reconfigure the mobile duopoly — remains to be seen.

In a public response to the CMA’s market study, an Apple spokesperson said:

Apple believes in thriving and dynamic markets where innovation can flourish. We face intense competition in every segment in which we operate, and our North Star is always the trust of our users. We will continue to create new opportunities for developers while protecting our user’s privacy and security.

Our rules and guidelines are constantly evolving, and we have made many recent changes that benefit developers and consumers alike. We will continue to engage constructively with the U.K. Competition and Markets Authority as their work on this study progresses.

Cupertino also claimed the iOS App Economy in the U.K. supports more than 330,000 jobs.

A Google spokesperson also sent us this statement:

Android provides people with more choice than any other mobile platform in deciding which apps and app stores they use. The Android app ecosystem also supports nearly a quarter of a million jobs across thousands of app developer and phone maker businesses in the UK. At Google we regularly review how we can best support these businesses — for example — as a result of recent changes, 99% of developers qualify for a service fee of 15% or less. We’re committed to building thriving, open platforms that empower consumers and help developers succeed.