LONDON — Britain’s competition watchdog has closed its investigations into Apple’s App Store and Google’s Play Store, citing a change in “administrative priorities,” as it prepares to introduce stronger enforcement powers against technology companies.
The Competition and Markets Authority (CMA) launched an investigation into Apple in 2021 after developers complained about the way the Californian tech giant runs its app store.
For many years, developers and app makers have complained about the restrictions Apple places on third-party developers and the fee of up to 30 percent that the company charges on all purchases made through the App Store.
The company’s biggest critics include Spotify and Fortnite developer Epic Games, the latter of which took its battle against Apple to US courts (Epic ultimately lost the case, but in the process a California court ordered Apple to make changes to the way its store works, including allowing links to external platforms and third-party services).
The CMA launched a separate investigation in June 2022 into alleged anti-competitive conduct by Google in relation to its own app store.
Both investigations have now been discontinued, the competition authority announced on Wednesday (21 August). The decision will be made pending the reform of British competition and consumer protection laws, which are due to come into force later this year as part of the Digital Markets, Competition and Consumers Act (DMCCA).
The law, 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 percent of annual global turnover on firms that breach consumer protection and competition laws.
“Once the new pro-competitive regime for digital markets comes into force, we may consider applying these new powers to concerns we have already identified through our existing work,” Will Hayter, executive director of digital markets at the CMA, said in a statement.
The CMA said it could use its new powers to investigate the companies “more holistically” than was possible under the investigations now closed if Apple and Google were each or both granted “strategic market status” – a categorisation that requires global turnover of more than £25 billion or UK turnover of more than £1 billion.
The regulator expects to launch three to four investigations into companies with strategic market status (SMS) in the first year after its new powers come into force. If the CMA finds that companies are exploiting their status to gain an unfair competitive advantage, it will take “targeted and proportionate action” to stop their behaviour.
The CMA also said it had rejected new commitments from Google that would have given app developers the option to use alternative payment options to Google Play’s billing system, known as “Developer Only Billing” and “User Choice Billing.” These proposals “did not effectively address the company’s competition concerns,” the CMA said.
A Google spokesperson then said the company had actively cooperated with the regulator throughout the investigation and had “made a number of important commitments to further expand the billing options available to developers through Google Play.”
Google says its fees are the lowest charged by the major app stores, with 99% of developers eligible for a service fee of 15% or less. The company says its Android app business generated nearly £10 billion in revenue for UK developers in 2022 and supported over 457,000 jobs in the UK. Apple did not respond to requests for comment from Billboard.
The CMA’s warning that it will continue to closely monitor the technology sector due to competition concerns and may launch further investigations in the not-too-distant future comes at a time when regulators and politicians around the world are looking for ways to curb the dominance of tech giants such as 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 like Spotify. (Apple appealed in May.)
The company was also forced to make changes to how its app store works in the 27-member EU trading bloc due to the European Union’s Digital Markets Act (DMA), which officially came into force in 2022, although companies had until March of this year to comply with its terms.
The Digital Markets Act requires technology companies trading within the EU to open their services and platforms to other companies and give them more freedom of action.
For music streaming services like Spotify, that means they’ll now be able to list pricing information for European users in their app – an update that’s “as obvious as it is overdue,” the company said in a blog post earlier this month. Freemium Spotify users looking to upgrade will also be able to see special introductory offers and post-promotion pricing.
While Spotify welcomes the gradual easing of restrictions, it says its long-running dispute with Apple is not over yet. Spotify continues to criticize the company for banning iOS users in the EU from purchasing subscriptions in the app. The reason for this is that Apple continues to demand illegal and predatory taxes despite the (European) Commission’s decision.
