Apple and Google could become the first SMS-designated firms under the CMA’s digital competition regime as the regulator opens its first SMS investigations
The CMA has opened its first SMS investigations into Apple and Google as it looks to enforce its digital competition regime
On 14 January 2025, the Competition and Markets Authority (CMA) opened its first strategic market status (SMS) investigation into Google’s search and search advertising services, marking the beginning of the enforcement of Digital Markets, Competition and Consumers (DMCC) Act. On 23 January 2025, the CMA then opened its second SMS investigations into Apple and Google’s mobile ecosystems. The two ongoing investigations will last nine months, so the latest potential SMS designation would be in October 2025. The CMA’s next SMS investigation is not expected until June 2025.
Effective competition for Google’s search platforms could keep down the costs of search advertising, lowering prices across the economy
The first investigation into Google in the search and search advertising market will assess how the tech giant’s market position affects consumers and businesses, such as advertisers and rival search engines. The regulator’s investigation will include assessments of whether Google is using its market position to self-preference its own services, to prevent innovation from other firms or to exploit large quantities of consumer data. The CMA estimates that effective competition would keep down the costs of search advertising at a level equivalent to nearly £500 per household yearly, lowering prices for consumers across the economy. Sarah Cardell (Chief Executive, CMA) has explained that 90% of all searches in the UK happen on Google’s platform and that more than 200,000 domestic businesses use Google’s search platforms to advertise. These statistics emphasise the importance of regulating for a competitive, level playing field. The CMA has proposed that one potential intervention would be to impose requirements on Google to make the data that it collects available to competitors. Regulatory authorities globally are also investigating these issues further and the CMA stated its intent to work in collaboration with a number of them from the US, Australia and Europe. The regulator has published an invitation to comment to aid the scope of its investigation which is open to respondents until 3 February 2025.
Regulating Apple and Google for competitive mobile ecosystems markets can be a catalyst for innovation and opportunity in the UK
The CMA’s second set of investigations focuses on Google and Apple’s respective mobile ecosystems which include their operating systems, app stores and mobile browsers. Similarly to the investigation into Google’s search services, the CMA will assess potential exploitative conduct such as unfair terms and conditions, the abuse of market power and the possible creation of market barriers by Apple and Google to prevent competitors from developing rival products and services on their platforms. These investigations will also study the impact on people who use mobile devices and the many UK businesses developing innovative services and apps for these devices. According to the CMA, almost 15,000 businesses are involved in the development of apps used on these mobile devices in the UK – a market that is estimated to have a total revenue of around £28bn. Mobile ecosystems are therefore critical to consumers, businesses and the economy and demand an effective competition regime to be in place. Cardell further promoted the benefits of more effective competition among mobile ecosystems, stating that this “could foster new innovations and new opportunities across a range of services that millions of people use”. The CMA previously investigated both Apple and Google for potential breaches of competition law in their mobile ecosystems, but these investigations were closed due to the implementation of the DMCC Act. In both investigations, the regulator rejected commitments proposed by the firms, suggesting that it may be more likely to impose stricter conduct requirements (CRs) on Apple and Google if they are designated. The CMA could require Apple and Google to open up access to key functionality needed by apps to operate on other mobile devices as a CR.
The CMA is mirroring the UK Government’s rhetoric on the need to regulate for growth in its SMS investigations
The CMA sees its enforcement of the digital competition regime as an opportunity to encourage growth in a variety of UK sectors. The regulator’s draft annual plan for 2025 centres around this regime and its enforcement under the DMCC Act as a means of promoting competition and growth in digital markets. It is worth noting though that following the departure of the former CMA Chair, Marcus Bokkerink, this draft plan may change. The UK Government is clear that it expects pro-growth regulation from sectoral regulators and the CMA’s rhetoric regarding its digital competition regime appears to increasingly match this. The Government has also been clear that it wants AI to be a keystone element of growth across all industries in its AI Opportunities Action Plan. It is no surprise that the CMA is looking to incorporate the growth of the sector into its digital markets work. Through the SMS investigations into Apple and Google’s mobile ecosystems, the regulator argues that we could see significant technological developments in AI and other areas such as digital wallets. These developments could potentially support further growth opportunities in parts of the economy which rely on mobile ecosystems. It could also aid smaller firms to compete with tech giants like Apple and Google on the AI front.
