UK Regulator’s Scrutiny Hits Apple, Google with Strategic Market Status

The competition regulator in Britain has aimed at the mobile ecosystems belonging to Google and Apple. According to CNBC, the UK’s scrutiny of Apple and Google involves compelling the two tech giants to change some aspects of their app stores.

The Strategic Market Status

The Competition and Markets Authority (CMA) started investigating the two US big techs in January this year. The probe focused on the mobile operating systems, browsers, and app stores belonging to Apple and Google.

Following the investigations, the regulator recommended that both companies be designated as having the strategic market status (SMS). This is a designation that the UK gives to huge firms that it considers as having “substantial and entrenched market power” and a “position of strategic significance” when it comes to digital activity.

The CMA has powers to compel SMS-designated companies to adjust or cease specific practices as a way of balancing competition. Apple and Google have taken issue with the CMA for the proposals it made. Both companies argue that the changes the regulator wants made would affect user security negatively and are bad for consumers.

Focus of the UK’s Antitrust Scrutiny

On July 23, the CMA said that businesses and consumers had raised concerns regarding mobile ecosystems that belong to Apple and Google. According to the competition watchdog, these concerns included inconsistencies in app store search ranking and a lack of predictability in app review processes.

The CMA said that developers had raised concerns regarding access to commercially sensitive data belonging to rivals by both Apple and Google. In its probe, the CMA focused on several aspects. One of them involved determining whether the US big techs had placed barriers that prevented their rivals from offering services or products on their mobile platforms.

The other aspect of the investigation involved examining whether the two tech giants were using their position in operating systems, browsers, or app distribution in favor of services or apps that belong to them. CMA’s probe also involved checking whether the US tech giants require developers to agree to ‘unfair terms and conditions’ in app stores to distribute their apps.

During the investigation, the UK regulator checked the percentage commission charged by Apple and Google on certain in-app purchases. It also reviewed the restrictions that the tech firms have placed on developers on informing customers about cheaper payment options or subscriptions outside their apps. The market share of the Android operating system, which belongs to Google, in the UK stands at over 61% while Apple’s iOS controls about 38% of the market. Apple runs the App Store and Safari browser, while Google owns the Google Play store and the Chrome browser.

CMA’s Push

The CMA wants Apple to make its distribution of apps fair, objective, and transparent by explaining rejections or delays and providing a complaint system. For both Google and Apple, the regulator wants to see published criteria used to rank apps on the Play and App stores.

The CMA is also looking for ways that the tech companies can allow developers to steer users to pay for services or products outside the app to avoid high in-app purchase fees. Additionally, the regulator wants to facilitate the easy transfer of data between Google’s Android and Apple’s iOS.

Reacting to CMA’s proposals, Apple said in a statement that they, “would undermine the privacy and security protections that our users have come to expect, hamper our ability to innovate, and force us to give away our technology for free to foreign competitors.”

Google’s Senior Director of Competition, Oliver Bethell, said that the company will engage the regulator over the issue.

“We will continue to engage with the regulator to make sure they fully understand these risks. These offerings enable great choice, security and innovation for users. That’s why today’s announcement is both disappointing and unwarranted,” Bethell said.