CMA looks to new digital markets competition regime to resolve app store concerns
Competition Act cases closed ahead of new digital markets regime coming into force.
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- CMA closes investigation into Google, and parallel Apple case, and instead expects to consider concerns under the new digital markets competition regime
- CMA had consulted on proposed commitments from Google, but these failed to sufficiently address concerns
The Competition and Markets Authority (CMA) has closed its existing Competition Act cases into Google’s Play Store and Apple’s App Store as it plans for the roll out of the new digital markets competition regime.
While the CMA has not taken any decisions on what digital activities or harms it will tackle first, it anticipates that its early work under the new digital markets competition regime will build on and leverage its experience in areas it has already studied, such as mobile ecosystems, which includes app stores.
The CMA opened these cases because it is concerned that Google and Apple are using their market positions via the Play Store and App Store respectively to set terms which may be unfair to UK app developers and which may restrict competition and consumer choice, potentially leading to higher prices and reduced choice for app users. The cases focused on the rules that require app developers offering digital content, such as games, to use Google Play’s or Apple’s own billing systems for in-app purchases, which the CMA is concerned limit developers’ choice of payment solution and make it more difficult for them to deal directly with their customers.
The move comes at the same time as the CMA rejects commitments submitted by Google in response to the CMA’s concerns. Google’s proposals would have given app developers the ability to use alternative payment options to Google Play’s billing system, under proposals known as ‘Developer-only Billing’ (DOB) and ‘User Choice Billing’ (UCB).
Having consulted app developers, and after reviewing their feedback as well as the available evidence, the CMA is not satisfied that Google’s proposed commitments address its competition concerns effectively.
Feedback from app developers suggested Google’s proposals to allow app developers to use alternative payment methods for in-app payments did not go far enough and they would in practice remain tied to the Google payment system. In particular, app developers referred to the level of commission they would still be paying to Google, and to the proposed ‘pop-up screens’ that might put users off completing a transaction.
In light of recent developments, in particular the passing in May of the Digital Markets, Competition and Consumers Act (DMCCA), the CMA has assessed its existing Competition Act investigation into Google’s Play Store and its parallel case into Apple’s App Store rules against its administrative priorities and decided to close these cases at this point. Should Apple or Google each or both be designated as having ‘strategic market status’ in connection with any digital activities in the mobile sector, the CMA will be able to use its new powers to consider the range of issues raised by parties more holistically than it otherwise could under these specific Competition Act investigations. This will also enable the CMA to consider what, if any, interventions may be needed following any designation.
Will Hayter, Executive Director for Digital Markets at the CMA, said:
Once the new pro-competition digital markets regime comes into force, we’ll be able to consider applying those new powers to concerns we have already identified through our existing work.
It’s critical that tech businesses in the UK, including app developers, can have access to a fair and competitive app ecosystem, helping to grow the sector, boost investment and result in better outcomes for UK consumers. These are all factors we are considering before launching our first investigations under the new regime.
More information can be found on the Google Play Store and Apple AppStore case pages.
Notes To Editors
- As set out in its provisional approach to implement the new digital markets competition regime overview paper, published in January 2024, the new regime gives the CMA the ability to impose requirements on the conduct of firms in digital markets where those firms have been designated as having Strategic Market Status – and to impose significant fines against firms if those requirements are breached.
- In that paper, the CMA also confirmed it expects to launch around 3 to 4 SMS investigations within the first year of the new digital markets competition regime coming into force, which is expected later this year.
- No decision has yet been taken as to the digital activities or firms that will be investigated by the CMA for possible SMS designation once its DMCCA powers are in force.
- The CMA has closed the Competition Act cases into Google’s Play Store and Apple’s App Store on the grounds of administrative priorities and has not taken any decisions as to whether the Competition Act 1998 has been infringed.
- For media enquiries contact the CMA press office on 0203 738 6460 or [email protected].