UK regulator targets Apple and Google as it aims to make app stores more open
The Competition and Markets Authority (CMA) has announced a proposal to designate Apple and Google with ‘strategic market status’ (SMS) in each of their mobile platforms and has published separate roadmaps of potential actions to improve competition.
Apple and Google’s mobile platforms hold an effective duopoly, with around 90 – 100% of UK mobile devices running on Apple or Google’s mobile platform.
The CMA’s investigation has heard concerns affecting businesses and consumers in the UK. These differ across Apple and Google but include:
- Inconsistent and unpredictable app review processes can create uncertainty for developers, meaning delayed or failed launches
- Inconsistent app store search rankings may favour apps owned by the firms
- Up to 30% commission on some in-app purchases, as well as restrictions on developers ‘steering’ customers outside of their app stores, for example, towards other ways to pay or subscribe, which could make some business models unviable, reduce consumer choice, and chill innovation
- Restrictions on developers’ access to features and functionality, including between smartphones and wearable technology (such as smart watches), may be impeding innovation
- ‘Choice architecture’ (like default settings, pre-installation, prominence, prompts, and friction) may favour the firms’ own services, limiting competition and genuine choice for users.
“It is essential the digital economy works well to power the success of businesses across the UK economy,” the CMA said.
“More competition and choice will unlock opportunities for UK businesses to invest, innovate and grow, as well as allowing UK consumers to benefit from the latest innovations, high-quality experiences and more choice.”
The UK app market
The UK has a vibrant app developer community, representing Europe’s largest app economy by revenue and app developer count. In total, the UK app economy generates an estimated 1.5% of the UK’s GDP and supports around 400,000 jobs here.
App-led innovation has powered the success of strategically important sectors for the UK, like financial services and gaming. Fintech stands out, attracting over £18 billion in inward investment over the past 3 years.
Meanwhile, gaming contributes £6 billion to the UK economy, with mobile gaming alone bringing in nearly £2 billion a year. UK developers are also behind many of the apps that make modern life work – helping millions of people work, shop, bank, travel, game, consume content and stay connected.
Measures outlined in the roadmaps focus on areas including:
- Ensuring a fair and transparent app review process and app store rankings to give UK app developers certainty.
- Allowing the ability to ‘steer’ users out of app stores, for example, to make purchases. Potentially driving innovation and financial savings for developers.
- Ensuring UK app developers have interoperable access to key Apple functionality to create innovative products and services.
- Addressing Apple restrictions on digital wallets to ensure UK FinTech can compete, and enabling connected devices like smartwatches and gaming headsets to seamlessly connect with smartphones.
- Ensuring consumers have a genuine choice over the services they use on their devices.
- Exploring the factors likely to be important for the development of AI services like voice assistants on mobile devices to ensure a level playing field in this rapidly advancing sector.
