Google and Apple are the first companies investigated for potential Strategic Market Status under the new U.K. Digital Markets, Competition and Consumers Act. If Google or Apple receives the designation, bespoke conduct requirements will be drafted for the company to follow, preventing anti-competitive practices.
On Jan. 23, the Competition and Markets Authority announced it would be assessing the mobile ecosystems of Google and Apple, including the companies’ operating systems, app stores, and default browsers, to see if they have disproportionate influence over the market.
SEE: UK Regulator Probes Apple’s Mobile Browser Dominance
“Given the importance of mobile ecosystems to people, businesses and the economy, it is critical that competition works well,” the CMA said in a press release. “Effective competition could ensure consumers and businesses are treated fairly by Apple and Google in relation to the terms and conditions they impose.
“Effective competition could also ensure open opportunities for businesses to innovate and deliver a range of content, services and technological developments to consumers on a mobile device.”
The announcement comes less than two weeks after the first Strategic Market Status investigation was announced. This was also looking at Google, but within the realm of search and search advertising services, where an advertiser pays for its advert to appear next to the results from a user’s search.
What is the DMCCA?
The DMCCA, which came into force on Jan. 1, is designed to regulate the behaviour of major digital firms with significant market power in the country. It grants the CMA new powers to impose requirements on tech companies with Strategic Market Status, reminiscent of the “gatekeeper” organisations that must abide by the E.U.’s Digital Markets Act.
For the mobile ecosystem investigations, the CMA will look at factors such as the extent Apple and Google’s competitors are able to offer rival products and services, whether Apple and Google are favouring their own apps and services within the iOS and Android ecosystems, and if developers are bound to unfair terms and conditions if they want to distribute apps in their respective app stores.
For the investigation into Google’s influence in search and search advertising services, the CMA will look at whether it is using its position to prevent innovation by others, such as withholding resources or designing AI services to limit how competing search engines could create equivalent features. The CMA will also assess whether the tech giant is using its dominant position to prioritise its search services such as for shopping or travel, collecting and using consumer data without informed consent, and using publisher content without fair terms and conditions.
SEE: Google Abusing Dominant Position in Ad Tech Sector, Says U.K. Government
The DMCCA gives new enforcement powers to a group established inside the CMA called the Digital Markets Unit. It will draft a unique set of conduct requirements for each company designated as Strategic Market Status, which they must abide by even before exhibiting anti-competitive practices to prevent them from occurring. Additionally, the DMU can make “pro-competition interventions” that will actively address a company’s adverse effects on competition that stem from its disproportionate market power.
Conduct requirements for Google and Apple in the realm of mobile ecosystems could include requiring the companies to provide third-party apps with the functionality needed to operate on iPhone or Android devices, or making it easier for users to download apps and pay for in-app content outside of Apple’s and Google’s own app stores. The CMA can continue to amend them even after completing the SMS investigation.
Requirements for Google in the realm of search and search advertising might include forcing the company to make the user data it collects available to competitors or giving publishers more control over how their data is used, including in Google’s AI services.
SMS-designated firms must have substantial market power in digital activity, strategic significance, and either a global turnover of more than £25 billion or a U.K. turnover of more than £1 billion. The CMA will conduct investigations into each firm before applying for SMS status, which usually takes about nine months.
Mobile ecosystems and search and search advertising services represent the first two areas of digital activity that the CMA has launched SMS investigations into. Decisions will be made by the end of October.
SEE: Regulator CMA to Scrutinize Microsoft and Other Cloud Service Providers in the UK
E.U. and U.S. also take issue with Google’s anticompetitive practices in Search
In March 2024, Google temporarily removed some Search widgets, such as Google Flights, to allow more access to individual businesses in response to the E.U.’s Digital Markets Act coming into force.
However, just a few weeks later, the E.U. opened an ongoing non-compliance investigation, as regulators claim it is promoting its own services above third parties’ in search results. In December, Google announced several more changes to its Search features to comply with the DMA.
In September 2024, the European Court of Justice upheld a €2.42 billion fine against Google for violating E.U. antitrust rules by favouring its own comparison shopping service, Google Shopping, in search results.
Additionally, in August 2024, a federal judge ruled that the tech company monopolizes general search services and text ads, breaking U.S. antitrust law.
However, Google is not going down without a fight. The tech company successfully overturned a €1.5 billion antitrust fine it received from the European Commission in 2019 for preventing third parties using its AdSense platform from displaying competitor ads next to Google search results.
Google was also handed a €4.34 billion fine from the European Commission in 2018 for abusing its dominance by pre-installing Google Search into Android devices but has since escalated an appeal to the European Court of Justice.
