Britain’s Competition and Markets Authority (CMA) announced on Thursday that it has launched an investigation into Apple and Google’s smartphone operating systems, app stores, and web browsers.
This marks the second time the CMA has utilized its expanded regulatory powers to scrutinize major technology companies. The probe will assess whether these companies hold a “strategic market status” within mobile ecosystems and analyze the impact of their dominance on consumers and businesses that develop apps and other services.
A Focus on Dominance in Mobile Ecosystems
The investigation centers on how Apple’s iOS and Google’s Android operating systems, alongside their respective app stores and browsers, shape the broader mobile ecosystem. Together, these two companies dominate the global smartphone market, controlling more than 99% of the operating system share. This duopoly grants them significant influence over what software and services can reach users, how developers can innovate, and the costs associated with delivering these innovations.
Sarah Cardell, chief executive of the CMA, emphasized the potential for change, saying, “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.”
The probe will examine how Apple and Google’s practices affect the digital economy, with a specific focus on whether their policies stifle competition, limit consumer choice, and hinder growth for businesses trying to operate within their ecosystems.
What Is “Strategic Market Status”?
Central to the investigation is the concept of “strategic market status,” a designation that identifies companies with a dominant position that allows them to shape market conditions unilaterally. The CMA’s focus will be on understanding whether Apple and Google hold such a position in the UK mobile market and, if so, whether they are using it to limit innovation or restrict competition.
Apple and Google have faced similar scrutiny from regulators worldwide, but the UK’s renewed focus demonstrates a commitment to holding tech giants accountable under its updated regulatory framework. Under the Digital Markets, Competition, and Consumers Bill, which strengthens the CMA’s powers, companies found to exploit their dominance could face hefty fines and regulatory interventions.
The Scope of the Investigation
The CMA’s investigation will address several key areas:
- App Store Policies:
The rules governing app development, monetization, and distribution are largely dictated by Apple and Google. Developers have long criticized practices such as high commission fees—up to 30% in some cases—for in-app purchases, mandatory use of proprietary payment systems, and opaque review processes. These policies often place smaller developers at a disadvantage, limiting their ability to compete on an equal footing. - Browser Control:
Both Apple and Google have also been accused of restricting competition in the web browser market. Apple mandates that all iOS browsers use its WebKit engine, while Google’s Chrome browser dominates on Android devices. This has led to concerns about reduced innovation and a lack of diversity in browser options. - Consumer Choice and Costs:
The CMA will also assess how the dominance of Apple and Google impacts consumers. Are users being offered enough choice in terms of apps and services? Are high developer fees ultimately driving up costs for end-users? These are some of the questions the CMA aims to address. - Impact on Business Growth:
The investigation will also evaluate the effects of Apple and Google’s market power on UK businesses. According to Cardell, better competition could spur growth in the country’s digital economy. “Businesses able to offer new and innovative types of products and services on Apple’s and Google’s platforms” would contribute significantly to the economy, she noted.
Global Context: Regulatory Scrutiny Intensifies
The UK’s move mirrors regulatory actions against Apple and Google in other parts of the world. In the European Union, both companies have faced antitrust investigations and fines over similar issues. The European Commission recently designated Apple and Google as “gatekeepers” under its Digital Markets Act, requiring them to comply with new rules aimed at curbing anti-competitive practices.
In the United States, both companies are under investigation for monopolistic behavior. Google is currently facing a landmark antitrust trial over its search engine practices, while Apple has faced scrutiny over its App Store fees and restrictions. South Korea and Japan have also taken steps to regulate app store practices, demanding greater transparency and reduced fees.
The CMA’s investigation adds to this growing global momentum for increased oversight of tech giants, signaling a significant shift in how governments and regulators approach Big Tech’s influence.
Industry Reaction
The announcement has sparked reactions from various stakeholders, including developers, industry groups, and consumer advocates. Many smaller developers have welcomed the investigation, arguing that Apple and Google’s policies stifle innovation and create unnecessary barriers to entry.
One independent app developer, speaking anonymously, said, “It’s become increasingly hard to compete when the rules are stacked against you. You’re forced to use their systems, pay their fees, and comply with their restrictions, which often feel arbitrary. This investigation is a step in the right direction.”
However, Apple and Google have defended their ecosystems, claiming that their policies are designed to ensure user safety, privacy, and a consistent user experience. In a statement, Apple emphasized the importance of its App Store in providing “a safe and trusted platform” for millions of users and developers. Google, meanwhile, pointed to the openness of Android, noting that it allows users and developers more flexibility compared to Apple’s ecosystem.
Potential Implications for Consumers and Developers
If the CMA finds that Apple and Google hold strategic market status and have abused their dominance, the consequences could be far-reaching. Possible outcomes include:
- Changes to App Store Fees: Regulators could mandate lower commission fees, making it cheaper for developers to distribute their apps.
- Increased Browser Choice: Apple could be required to relax its WebKit requirement, potentially leading to more competition in the browser market.
- Enhanced Consumer Options: Consumers might see more app stores, payment systems, and browser options, increasing competition and lowering costs.
- Regulatory Precedents: A strong stance by the CMA could encourage other countries to adopt similar measures, amplifying the global push for accountability in Big Tech.
Despite its ambitious scope, the investigation is likely to face challenges. Both Apple and Google have vast legal resources and experience defending their practices in court. Additionally, the complexity of modern tech ecosystems makes it difficult to draw clear lines between practices that benefit users and those that stifle competition.
Critics of the investigation warn that overly aggressive regulation could backfire, leading to unintended consequences such as reduced investment in app ecosystems or diminished innovation. Balancing the need for competition with the benefits of integrated ecosystems will be a delicate task for regulators.
The CMA’s investigation is expected to take several months, if not years, to complete. During this time, regulators will gather evidence, consult with stakeholders, and develop potential remedies. For now, the probe serves as a clear signal that the UK is serious about tackling Big Tech’s dominance and creating a more competitive digital economy.
As the global regulatory landscape continues to evolve, the outcomes of this investigation could have lasting implications—not just for Apple and Google, but for the entire tech industry. Whether this marks the beginning of a more balanced digital ecosystem or a protracted legal battle remains to be seen.
For now, all eyes are on the CMA as it takes on two of the most powerful companies in the world, with the hope that the investigation will bring about meaningful change for consumers, developers, and businesses in the UK and beyond.
