Apple, Google Face UK Antitrust Probe Into Mobile Ecosystem Power

[MacRumors]

UK regulators on Thursday launched an investigation into Apple and Google's smartphone ecosystems to assess whether they have "strategic market status" (SMS), a designation that if imposed would subject the companies to specific conduct requirements set by the Competition and Markets authority (CMA) to improve competition.

The investigation will look at the companies' operating systems, app stores and browsers that operate on mobile devices, and the impact they have on users and on businesses developing content and services such as apps for iOS and Android devices. According to the CMA's press release, the issues that will form part of the CMA's investigations include:

• The extent of competition between and within Apple's and Google's mobile ecosystems. The CMA will assess how competition is working across Apple's and Google's mobile ecosystems and what barriers may be preventing other competitors from offering rival products and services on Apple's and Google's platforms.
• Possible leveraging of Apple's and Google's market power into other activities. This will include investigating whether Apple or Google are using their position in operating systems, app distribution or browsers to favour their own apps and services, which often come pre-installed and prominently placed on iOS and Android devices.
• Potential exploitative conduct. This will include investigating whether Apple or Google are requiring app developers to sign up to unfair terms and conditions as a condition of distributing their apps on Apple's and Google's app stores; and whether users may be presented with 'choice architecture' which makes it difficult to make active choices about which apps they are using on mobile devices.

If deemed to have SMS designation, the potential conduct requirements the companies would have to comply with could include, for example, requiring Apple or Google to open up access to key functionality needed by other apps to operate on mobile devices, or making it possible for users to download apps and pay for in-app content more easily outside of Apple's and Google's own app stores.

Sarah Cardell, chief executive of the CMA, said:

"The operating systems, apps and browsers installed on our phones and tablet devices act as our gateway into the digital world – whether that is communicating with our friends and loved ones, buying from businesses or accessing creative content.

"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. Better competition could also boost growth here in the UK, with businesses able to offer new and innovative types of products and services on Apple's and Google's platforms."

This is the second announced SMS investigation in as many weeks, the first of which is looking into Google Search's approximately 90% market share. The CMA said at the time that a second one would be coming this month, and now we have it. The CMA can impose significant fines for non-compliance, including up to 1% of a firm's annual worldwide turnover, with additional penalties for continued noncompliance. Individuals in senior management positions may also face fines or disqualification from serving as directors.

The probe will take no more than nine months, and the statutory deadline for both investigations is October 22, 2025. The investigations are separate to the CMA's ongoing market investigation into mobile browser and cloud gaming restrictions put in place by both Apple and Google.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple, Google Face UK Antitrust Probe Into Mobile Ecosystem Power

 

[mrochester]

Can we please have an investigation into the lack of competition at the operating system level? Any lack of competition on the existing platforms themselves is pointless to investigate until we have established and rectified the issues at the operating system level.

 

[steve09090]

Can we please have an investigation into the lack of competition at the operating system level? Any lack of competition on the existing platforms themselves is pointless to investigate until we have established and rectified the issues at the operating system level.

Exactly. I’d like to see them investigate what they could do to foster innovation into new operating systems.

There is always Xiaomi. You can’t have only 2 OS's and only allow 2 OS's and complain that there is no competition.

Instead of fines, they could just regulate the market like they do with so many other areas like pharmaceutical, cigarettes, alcohol. But they'd rather have investigations and reviews, and court cases just to justify their own existence. Talk about a self serving monopoly.

 

[surferfb]

This looks like a more reasonable investigation than the DMA. I appreciate that they are looking at competition between the two OSes before declaring changes are needed, and limiting the fines to 1% instead of an insane 20% of worldwide revenue is welcome.

Edit: it appears the 1% is a typo and it is actually 10% of worldwide revenue. Which is better than 20%, but still insane. We'll see how it shakes out.

 

[wanha]

Can we please have an investigation into the lack of competition at the operating system level? Any lack of competition on the existing platforms themselves is pointless to investigate until we have established and rectified the issues at the operating system level.

It's the nature of the OS market to want to consolidate around few operating systems, because network effects are the key to their vitality.

Without a large enough user base, you can't attract developers. And you can't attract customers unless you have enough apps and services (which require developers).

It's a chicken and egg problem that exists on such a scale that it is extremely difficult to solve.

Microsoft spent billions trying to buy their way into the smart phone OS market with the purchase of Nokia and paying developers to port their apps onto Windows Phone (which was pretty good) but they still failed miserably.

 

[mrochester]

It's the nature of the OS market to want to consolidate around few operating systems, because network effects are the key to their vitality.

Without a large enough user base, you can't attract developers. And you can't attract customers unless you have enough apps and services (which require developers).

It's a chicken and egg problem that exists on such a scale that it is extremely difficult to solve.

Microsoft spent billions trying to buy their way into the smart phone OS market with the purchase of Nokia and paying developers to port their apps onto Windows Phone (which was pretty good) but they still failed miserably.

But that’s what regulations are supposed to solve! We can use regulations to force competition to exist.

 

[GMShadow]

Someone should remind the harpies at the CMA that the US will be much less cooperative and tolerant of their impotent games this time.

 

[WarmWinterHat]

Someone should remind the harpies at the CMA that the US will be much less cooperative and tolerant of their impotent games this time.

The US (which I'm a part of) has no authority over the CMA, or the EU, and should mind it's own borders and business.

 

[cjsuk]

Yet at the same time nothing is going on regarding the state of social media companies. In case we annoy our political classes.

 

[smetvid]

I'm all for regulation but I'm not so sure there is room for innovation by going this route. It feels like it would just create clones or "me too" kind of companies. None of which would really push innovation. Just more of the same. Like switching to Linux now on computers. The option has been there for decades but few actually use it.

Replacing the OS and or App Store wouldn't exactly provide any innovation. Just like moving between MacOS, Windows or Linux doesn't really provide any true innovation. Just more or less the same.

To truly innovate I feel like someone has to create the next big thing. Reinvent the concept of a phone and do something Apple and Google just cannot do yet. Nobody will do that by piggy backing off an existing concept.

There is also the potential negative impact this can have on consumers. Too many market options can lead to confusion and anxiety about which to choose. It can also make it more difficult to switch to other systems. How would apps work when moving across systems?

As an app developer I don't have to have to target a 3rd, 5th or tenth platform either. There would need to be at least a core standard like how different Linux distributions are all still based on Linux. Who decides whats the right system to make the global standard? Every government across the world would have to decide together.

This seems about as logical as trying to eliminate money globally. Sounds neat on paper or on Star Trek but I'm not sure it's the best use of time right now. Not when there are significantly larger threats out there in the world like the impact of AI on the global economy and job market or the spread of misinformation and deception on social media and corporate media.

If I could see room for great innovation I would be on board but I just don't see it.

 

[icanhazmac]

But that’s what regulations are supposed to solve! We can use regulations to force competition to exist.

Great, you can be the first, to be force regulated into using a Blackberry. Then come back an tell us how great it is.

 

[Fender2112]

Here we go again :🤦:

 

[mrochester]

Great, you can be the first, to be force regulated into using a Blackberry. Then come back a tell us how great it is.

You don’t regulate the consumers, you regulate the smartphone manufactures and app developers. Both parties want to benefit financially from the market so they should also bear the greatest burden.

 

[bsolar]

This looks like a more reasonable investigation than the DMA. I appreciate that they are looking at competition between the two OSes before declaring changes are needed, and limiting the fines to 1% instead of an insane 20% of worldwide revenue is welcome.

The legal basis is the Digital Markets, Competition and Consumers Act 2024, which is basically the UK's equivalent of the DMA. They are not only looking into OS competition but also whether the market strength in the OS market is being abused to unfairly compete in other markets.

I don't think the 1% maximum fine is correct: for engaging in illegal commercial practices the maximum fine should be 10% global turnover:

182 (6) The amount of a monetary penalty imposed under subsection (4)(b) must be a fixed amount not exceeding £300,000 or, if higher, 10% of the total value of the turnover (if any) of the respondent.

 

[icanhazmac]

You don’t regulate the consumers, you regulate the smartphone manufactures and app developers.

And even if you regulate an other OS or two into existence, how are you going to force people to use them? Be specific. Again, will you sign up for a Windows or Meta OS phone?

 

[I7guy]

I'm all for regulation but I'm not so sure there is room for innovation by going this route. It feels like it would just create clones or "me too" kind of companies. None of which would really push innovation. Just more of the same. Like switching to Linux now on computers. The option has been there for decades but few actually use it.

Replacing the OS and or App Store wouldn't exactly provide any innovation. Just like moving between MacOS, Windows or Linux doesn't really provide any true innovation. Just more or less the same.

To truly innovate I feel like someone has to create the next big thing. Reinvent the concept of a phone and do something Apple and Google just cannot do yet. Nobody will do that by piggy backing off an existing concept.

There is also the potential negative impact this can have on consumers. Too many market options can lead to confusion and anxiety about which to choose. It can also make it more difficult to switch to other systems. How would apps work when moving across systems?

As an app developer I don't have to have to target a 3rd, 5th or tenth platform either. There would need to be at least a core standard like how different Linux distributions are all still based on Linux. Who decides whats the right system to make the global standard? Every government across the world would have to decide together.

This seems about as logical as trying to eliminate money globally. Sounds neat on paper or on Star Trek but I'm not sure it's the best use of time right now. Not when there are significantly larger threats out there in the world like the impact of AI on the global economy and job market or the spread of misinformation and deception on social media and corporate media.

If I could see room for great innovation I would be on board but I just don't see it.

Innovation is not the target here. Competition is. In fact innovation be damned. It’s like taking a can opener to google and apple.

The way things are going in the UK and the EU I think Tim Apple and sundar google should talk to the head cheese and get out of the sandbox.

 

[10anta]

As a Brit I feel the need to apologise for the sheer stupidity of a regulator trying to magic a tech competitor and compelling app ecosystem into being through the courts.

 

[rp2011]

Can we please have an investigation into the lack of competition at the operating system level? Any lack of competition on the existing platforms themselves is pointless to investigate until we have established and rectified the issues at the operating system level.

While we are at it, launch an investigation into why UK citizens choose Apple or Google instead of a home grown product. Then launch an investigation on why and how the UK government cannot foster innovation. I mean to REALLY get to the bottom of things.

 

[mrochester]

And even if you regulate an other OS or two into existence, how are you going to force people to use them? Be specific. Again, will you sign up for a Windows or Meta OS phone?

Well when people buy a phone from a manufacturer with the manufacturers OS on it then that is the OS and ecosystem that the consumer will use until they buy another phone, which may be from the same manufacturer and therefore the same OS, or a different manufacturer and therefore a different OS. The consumer would have the choice.

 

[WarmWinterHat]

Well when people buy a phone from a manufacturer with the manufacturers OS on it then that is the OS and ecosystem that the consumer will use until they buy another phone, which may be from the same manufacturer and therefore the same OS, or a different manufacturer and therefore a different OS. The consumer would have the choice.

Better idea, decouple hardware from software ecosystems lock-in.

 

[spazzcat]

Can we please have an investigation into the lack of competition at the operating system level? Any lack of competition on the existing platforms themselves is pointless to investigate until we have established and rectified the issues at the operating system level.

It’s because it takes millions, if not billions, of dollars to create and maintain an OS and platform. Also, you need to convince people to change their current habits and use your new OS, which is probably even harder than creating the OS itself. People don't like change.

 

[Le Big Mac]

This looks like a more reasonable investigation than the DMA. I appreciate that they are looking at competition between the two OSes before declaring changes are needed, and limiting the fines to 1% instead of an insane 20% of worldwide revenue is welcome.

The legal basis is the Digital Markets, Competition and Consumers Act 2024, which is basically the UK's equivalent of the DMA. They are not only looking into OS competition but also whether the market strength in the OS market is being abused to unfairly compete in other markets.

I don't think the 1% maximum fine is correct: for engaging in illegal commercial practices the maximum fine should be 10% global turnover:

@bsolar is correct - the article must be a typo, as the authority is for up to 10% of global turnover as a fine. But note that's only after the company has been established as having strategic market status and violates whatever obligations have been put in place. And it's a cap that is likely well above what CMA guidance would calculate as a penalty.

 

[mrochester]

Better idea, decouple hardware from software ecosystems lock-in.

No that leads to the problem we have now of ‘winner takes all’. We need hardware and software to be tied together so that with competition in hardware comes competition in software.

It should not be possible for Samsung phones to come with Android. They should have Samsung OS. It should not be possible for Motorola phones to come with Android. They should have Motorola OS. Allowing Samsung and Motorola to use Android creates a monopoly in the mobile operating system market to the detriment of consumer choice.

 

[I7guy]

Better idea, decouple hardware from software ecosystems lock-in.

Sure and while we’re (we’re in the government) let’s do the same across the board for many common items people buy.

Decouple everything and have laws that force hardware manufacturers to accept any software a user wants to load onto their hardware.

 

[CarpalMac]

Yet at the same time nothing is going on regarding the state of social media companies. In case we annoy our political classes.

Far too few control far too much, across multiple business domains.

Recent events are clear evidence of what we can expect as a result.