LONDON — The U.K.'s competition regulator has closed its investigations into Apple's App Store and Google's Play Store, citing a shift in “management priorities” as it prepares to roll out stronger enforcement powers at tech companies.
The Competition and Markets Authority (CMA) launched an investigation into Apple in 2021 following complaints from developers about the way the California-based tech giant operates its app store.
For years, developers and app makers have complained about Apple's restrictions on third-party developers and the up to 30% fee it charges them on all purchases made through its app store.
Two of the company's biggest critics have been Spotify and Fortnite developer Epic Games, with the latter battling Apple through the US courts (Epic ultimately lost the case, but along the way a California ordered Apple to make changes in the way its store operates, including by allowing links to external platforms and third-party services).
The CMA opened a separate investigation into suspected anti-competitive behavior by Google in relation to its own app store in June 2022.
Both of those inquiries have now been dismissed, the competition watchdog announced on Wednesday (21 August), pending reforms to UK competition and consumer protection laws due to come into force later this year under the Digital Markets, Competition and Consumer Act. DMCCA).
The law, which was passed by the previous government in May, gives the CMA new and expanded powers over how large digital companies operate in the UK, including the ability to directly impose fines of up to 10% of global annual turnover on companies found to be in breach of consumer protection and competition laws.
“Once the new pro-competitive digital markets regime comes into force, we will be able to consider applying these new powers to concerns we have already identified through our existing work,” said Will Hayter, executive director of digital markets at the CMA. in a statement.
The CMA said that if Apple or Google were each or both classified as having “strategic market status” – a categorization that requires global turnover of more than £25bn or UK turnover of more than £1bn – it would it can use new powers to investigate companies “more holistically” than it could under its now closed investigations.
The regulator said it expected to launch three to four investigations into companies with strategic purchasing status (SMS) within the first year of its new powers coming into effect. If the CMA finds that businesses are using their status to gain an unfair competitive advantage, it says it will need “targeted and proportionate action” to tackle their behaviour.
The CMA also said it rejected new commitments from Google that would have given app developers the option to use alternative payment options in Google Play's billing system, under proposals known as “Developer Only Charging” and “User Choice Charging”. These proposals failed to “effectively address its competition concerns”, the CMA said.
In response, a Google spokesperson said the company has actively cooperated with the regulator throughout its investigation and “has made a number of significant commitments to further expand the billing options available to developers through Google Play'.
Google says its fees are the lowest charged by major app stores with 99% of developers qualifying for a service charge of 15% or less. The company says that in 2022 its Android app business generated nearly £10 billion in revenue for British developers and supported more than 457,000 jobs in the U.K. Apple did not respond to requests for comment when contacted by Billboard.
The CMA's warning that it will continue to closely monitor the technology sector due to competition concerns and may reopen further investigations in the not-too-distant future comes as regulators and politicians around the world look at ways to curb dominance tech giants like Apple. Amazon, Google and Meta.
In March, the European Commission fined Apple 1.8 billion euros ($1.95 billion) for violating competition law and unfairly favoring its own music streaming service over rivals including Spotify. [Apple appealed in May.]
The company has also been forced to make some changes to how its App Store operates in the 27-member EU trading bloc as a result of the European Union's Digital Markets Act (DMA), which officially comes into force in 2022, although the companies had until March of this year to comply with its terms.
The Digital Markets Act requires tech companies trading in the EU region to open up their services and platforms to other businesses and allow them to operate more freely.
For music streaming services like Spotify, that means it's now able to list pricing information in its app for European users — an update that's “both obvious and overdue,” the company said in a blog post earlier this month. . Freemium Spotify users looking to upgrade can also see special introductory offers and pricing once an offer ends.
While Spotify welcomed the gradual easing of restrictions, it says its long-running battle with Apple is far from over and continues to criticize the company for preventing EU iOS users from buying in-app subscriptions for what it describes as “illegal and predatory taxes Apple continues to demand, despite [European] Decision of the Commission”.
