It appears increasingly likely that the UK’s CMA will address anti-competitive behaviour through its implementation of the DMCC Act
The CMA previews possible interventions for mobile ecosystems
On 8 August 2024, the UK’s Competition and Markets Authority (CMA) published a working paper on the types of remedies it is considering in the context of its market study on mobile browsers and cloud gaming. The study was first launched in November 2022 but only recommenced in January 2024 following a suspension in 2023 due to a Competition Appeal Tribunal (CAT) judgement. The CMA is particularly concerned with the dominance of Apple and Google over key gateways for mobile devices, including browsers, operating systems and app stores. The conditions and restrictions placed on developers seeking access through these gateways are alleged to be restricting competition in downstream markets, including cloud gaming, which the regulator recognises as a multi-billion pound industry with high growth potential in the UK. The CMA is accepting comments on its remedies working paper until 29 August 2024 and is expected to issue a report on its provisional decision for the study in October 2024.
Both the DMCC Act and the DMA provide important regulatory context to the inquiry
Before outlining the types of remedies it is considering in relation to the mobile ecosystem markets it has identified, the CMA detailed a number of cross-cutting issues which will influence its decisions. In addition to well-established concerns in digital markets regulation, including the rapid pace of technological development and the global nature of markets, the regulator also cited the UK’s Digital Markets, Competition and Consumers (DMCC) Act and the EU’s Digital Markets Act (DMA) as important regulatory contexts for the study. The CMA noted it was considering both the compliance plans of Apple and Google in relation to their designations under the DMA as well as the potential to leverage its new powers under the DMCC Act to address anti-competitive behaviour. As of 22 August 2024, the regulator appears even more likely to channel intervention through its DMCC Act jurisdiction, having closed two ongoing antitrust investigations into the Google Play Store and Apple App Store and citing the probability of designating the services under the new law.
Obligations under the DMCC Act would likely mirror the remedies discussed in this market study
Should the CMA go ahead with recommending interventions in relation to this market study, these are currently likely to be behavioural in nature, with the regulator stating that at this stage it has not identified structural remedies that would effectively address any of its potential concerns. Through its other working papers, the CMA highlighted 10 issues it identified in the interrelated functioning of the browser, operating system and app store markets. For each of these issues, the regulator provided a range of potential remedies of varying degrees of intervention. In relation to concerns surrounding default browser settings, for instance, the CMA suggested that anti-competitive behaviour could be addressed by requiring multiple browsers to be pre-installed on devices. However, the alleged self-preferencing behaviour from Apple and Google could also be remedied by requiring choice screens to select default browsers and ensuring default browser selections are applied to all potential access points within an operating system. The CMA would have a similar opportunity to select a package of bespoke and proportionate behavioural obligations for designated platforms under its forthcoming DMCC Act authority as well, suggesting the options described in this market study are likely to still be indicative of remedies applied to the market if the regulator chooses to defer its intervention.
A number of other regulators have launched similar investigations into the presence and behaviour of big tech in mobile ecosystems
The CMA and the EC are not alone in investigating the functioning of mobile ecosystem markets and alleged anti-competitive behaviour by Apple and Google. Though Apple has largely escaped scrutiny for its Safari mobile browser, the firm’s app store restrictions for web developers have been the subject of at least 12 investigations around the world. This includes an EU investigation into the distribution of music streaming apps that resulted in a €1.8bn (£1.54bn) fine for the tech giant. Claims related to Apple restricting the development of mobile cloud streaming and gaming services is also one of the primary allegations in the US Department of Justice’s (DOJ) ongoing antitrust lawsuit against the firm. Google has similarly faced investigations into its app store terms in at least four different jurisdictions. In South Korea, the tech giant was fined KRW42.1bn (£25.7m) in 2023 for abusing its dominance in app distribution and preventing mobile game developers from releasing their apps outside of the Google Play Store. A number of regulators around the world also have related investigations into the relationship between these firms' software services, such as browsers, and their interests as device manufacturers.
Studies into cloud gaming rarely consider the role of connectivity in the market’s development
Though the CMA cites the important economic opportunity that the growth of the cloud gaming industry in the UK presents, the regulator does not necessarily address the foundational markets necessary to its growth, which could include network connectivity, cloud computing and hardware such as mobile devices. Similar to other data-intensive mobile services like video and audio streaming, cloud gaming is emerging as a primary use case for the more advanced connectivity offered by 5G and particularly 5G Standalone networks. Such considerations were made in a recent market study on audiovisual service markets in Brazil by the Department of Economic Studies of the Administrative Council for Economic Defense (Cade) in which the regulator identified network development as the primary input for market convergence between pay TV and video-on-demand (VoD) services. Though the competitive concerns at the software level of mobile gaming highlighted by competing tech firms such as Epic Games are well-represented in the CMA’s study, the UK and other jurisdictions with an economic interest in the development of these markets will need to consider the importance of connectivity to these services and the current and future sites of interaction between tech firms and telecoms operators that could become competitive bottlenecks.
