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Google and Apple face enforced changes to how they operate their mobile phone platforms, after the UK’s competition watchdog ruled the companies require tougher regulatory oversight.
The Competition and Markets Authority has conferred “strategic market status” (SMS) on the tech firms after investigating their mobile operating systems, app stores and browsers. It means Apple and Google will be subjected to tailormade guidelines to regulate their behaviour in the mobile market.
The CMA said the two companies have “substantial, entrenched” market power, with UK mobile phone owners using either Google or Apple’s platforms and unlikely to switch between them. The regulator flagged the importance of their platforms to the UK economy and said they could be a bottleneck for businesses.
Will Hayter, the executive director for digital markets at the CMA, said: “The app economy generates 1.5% of the UK’s GDP and supports about 400,000 jobs, which is why it’s crucial these markets work well for business so they can invest, innovate and drive the growth this country needs.
“Apple and Google’s mobile platforms are used by thousands of businesses right across the economy to market and sell products and services to millions of customers, but the platforms’ rules may be limiting innovation and competition.”
Changes under consideration by the CMA include allowing users to be “steered” out of app stores to make purchases elsewhere, like on a company’s own website. App developers have long taken issue with Apple and Google taking a cut from purchases made via apps.
The CMA also wants both companies to ensure users have a “genuine choice” over the services they use on their devices, like digital wallets on Apple.
The move by the regulator has come under a new regulatory regime brought in by the Digital Markets, Competition and Consumers Act 2024 and follows the designation of Google’s search business as requiring SMS oversight.
Google described the CMA decision as “disappointing, disproportionate and unwarranted”.
Oliver Bethell, a senior competition director at the company, said: “The UK’s new digital markets regime was introduced with the promise of being pro-growth and pro-innovation, with the CMA emphasising that its work would be highly targeted and proportionate. In this context, we simply do not see the rationale for today’s designation decision.”
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Apple, a strong critic of the EU’s tech regulatory regime, which has targeted the iPhone maker and Google, also criticised the decision.
“Apple faces fierce competition in every market where we operate, and we work tirelessly to create the best products, services and user experience,” said the company. “The UK’s adoption of EU-style rules would undermine that, leaving users with weaker privacy and security, delayed access to new features, and a fragmented, less seamless experience.”
