The Competition and Markets Authority (CMA) has decided to close its current investigations into Google’s Play Store and Apple’s App Store, shifting its focus to the new digital markets competition regime. This move comes as part of the CMA’s strategy to address competition issues more effectively under the forthcoming regulatory framework.
CMA’s Decision and Future Approach
The CMA’s decision to close its existing Competition Act cases follows a comprehensive review of concerns related to the dominance of Google and Apple in the app store market. The authority had been scrutinising whether the terms imposed by these tech giants on app developers were unfair, potentially limiting competition and consumer choice. Specifically, the investigations examined restrictions that mandated developers to use Google Play’s or Apple’s own billing systems for in-app purchases.
The CMA had consulted on Google’s proposed solutions, including Developer-only Billing (DOB) and User Choice Billing (UCB). However, these proposals were found insufficient in addressing the authority’s concerns. Developers reported that the suggested changes did not resolve issues related to high commission fees and restrictive payment processes. Additionally, the proposed ‘pop-up screens’ for alternative payments were criticised for potentially discouraging users from completing transactions.
Transition to New Digital Markets Regime
With the recent enactment of the Digital Markets, Competition and Consumers Act (DMCCA), the CMA is preparing to leverage new regulatory powers designed to enhance competition in digital markets. The new regime will enable the CMA to address competition issues more comprehensively, considering a broader range of factors affecting the app ecosystem. This shift aims to create a more competitive environment and address longstanding concerns about market fairness and consumer protection.
The new digital markets regime will allow the CMA to evaluate digital activities and market conditions more holistically. This includes the possibility of designating Google or Apple with ‘strategic market status’ if they are found to significantly impact competition. Such a designation would grant the CMA additional powers to enforce regulatory interventions and promote fair competition within the app store sector.
Impact on the App Ecosystem
The CMA’s shift in approach highlights its commitment to adapting regulatory practices to better address the evolving challenges in the digital marketplace. The authority is focused on ensuring that the app ecosystem remains competitive and fair for all participants. This includes safeguarding the interests of app developers who may face restrictive practices from dominant market players.
Will Hayter, Executive Director for Digital Markets at the CMA, commented: “As we transition to the new digital markets regime, we’ll be equipped with enhanced powers to tackle competition issues in the app store sector. Our goal is to ensure a fair and competitive environment for UK app developers and consumers, fostering growth and innovation in the sector.”
The CMA’s new regime is anticipated to provide a more robust framework for investigating and addressing digital market concerns. It will enable the authority to consider a wider range of issues and implement measures that can improve market conditions and enhance consumer protection.
The CMA’s decision to close the existing Competition Act cases and focus on the new digital markets regime underscores its proactive approach to digital market regulation. As the new regime is rolled out, the CMA will continue to monitor developments and prepare to launch investigations that align with its updated regulatory priorities. The aim is to create a fair and competitive digital market that supports innovation and benefits consumers and businesses alike.