In parallel, the CMA is also launching a competition law investigation into Google’s Play Store rules.
The Competition and Markets Authority is consulting on its plans to launch a market investigation into Apple and Google’s market power in mobile browsers and Apple’s restrictions on cloud gaming through its App Store. According to the CMA, Apple and Google “hold all the cards” with interventions needed to give innovators and competitors a fair chance to compete in mobile ecosystems.
The consultation follows a year-long study by the CMA of the companies’ mobile ecosystems. It has now published its final report on the study. It found that Apple and Google have “an effective duopoly on mobile ecosystems that allows them to exercise a stranglehold over these markets, which include operating systems, app stores and web browsers on mobile devices”.
The CMA says that without interventions, both companies are likely to maintain, and even strengthen, their grip over the sector, further restricting competition and limiting incentives for innovators.
While the report identified a range of potential interventions across these ecosystems, the CMA has looked at where it can take immediate targeted action to tackle these problems using its current powers. As a result, the CMA is now consulting on making a market investigation reference into mobile browsers and access to cloud gaming on mobile devices.
Browsers are powered by a so-called engine which is fundamental to browser performance. 97% of all mobile web browsing in the UK in 2021 took place on browsers powered by either Apple’s or Google’s browser engine. Apple bans alternatives to its own browser engine on its mobile devices; a restriction that is unique to Apple. The CMA is concerned that this severely limits the potential for rival browsers to differentiate themselves from Safari (for example, on features such as speed and functionality) and limits Apple’s incentives to invest in its browser engine.
This restriction also significantly adversely affects the capability of web apps (apps that run on a browser rather than having to be individually downloaded), which deprives consumers and businesses of their full benefits. Mobile devices also typically have either Google’s Chrome or Apple’s Safari pre-installed and set as default at purchase, giving them a key advantage over other rival browsers. Apple and Google both have strong positions in mobile web browsing, with a combined share of supply of around 90% for their browsers.
The CMA’s report says that Apple has also blocked the emergence of cloud gaming services on its App Store. Like web apps, cloud gaming services are a developing innovation, providing mobile access to high-quality games that can be streamed rather than individually downloaded. Gaming apps are a key source of revenue for Apple and cloud gaming could pose a real threat to Apple’s strong position in app distribution. By preventing this sector from growing, Apple risks causing mobile users to miss out on the full benefits of cloud gaming.
During its market study, the CMA heard concerns from various UK businesses and start-ups who said that the restrictions in relation to mobile browsers and cloud gaming make it harder for them to innovate and compete in these markets.
The proposed market investigation will further assess the competition concerns identified to date in both areas and decide what, if any, action is appropriate. This could include making legally binding orders requiring changes to be made to Apple’s and Google’s practices.
The CMA is also launching a competition law investigation into Google’s Play Store rules which require certain app developers to use Google’s own payment system (Google Play Billing) for in-app purchases. Separately, the CMA has an existing competition law investigation underway in relation to Apple’s App Store terms and conditions, which started in March 2021.
The consultation on the proposed market investigation reference ends on 22 July.