The Competition Commission is using the EU’s Digital Market Act as inspiration as it seeks to address problems with self-preferencing and app store fees
Conclusion of the inquiry into platform economy: On 28 July 2023, the Competition Commission of South Africa published a final report and decision following its market inquiry into Online Intermediation Platforms. The Commission defined these platforms as ‘B2C’ companies that facilitate transactions between business users and consumers for the sale of goods, services and software. It began the two-year inquiry to confirm whether there are market features of online intermediation platforms that may impede, distort or restrict competition, and to determine whether the participation of SMEs and ‘historically disadvantaged persons’ (HDPs) in digital markets was being impacted.
The review had four key focus areas: The scope of the inquiry was limited to platforms that affect “real business activity” across the economy, including eCommerce marketplaces, online travel agents and classifieds, food delivery, app stores and Google Search. It was focused on four areas of competition and public interest, namely market features that may:
Hinder competition among platforms themselves;
Hinder competition among business users or undermine consumer choice;
Give rise to exploitative treatment of business users; and
Negatively impact the participation of SMEs and/or HDP firms.
The Commission has leveraged obligations contained in the DMA: The Commission’s far-reaching report identified a number of issues, which it considered should be subject to binding remedial action. For example, the inquiry found that Google Search’s dominance and business model distorts platform competition, and directed it to help improve paid and organic result visibility for smaller South African rivals. Google has also been told to stop self-preferencing of its own shopping and travel units on its search results page, and to implement measures equivalent to those it has introduced to comply with similar provisions in the EU’s Digital Markets Act (DMA). Under the DMA, self-preferencing (e.g. ranking own products higher than others in searches) is a core prohibition for ‘gatekeepers’.
Apple and Google enjoy a powerful position in the app store market: In the app store market, the Commission found that Apple and Google are unconstrained in the commission fees they can charge paid app developers, and that their global business model limits the curation and visibility of South African apps. The tech firms have been instructed to make adjustments to their payment mechanisms and to host domestic apps on their platforms, providing developers with advertising credits. South Africa is not the only country where this market has faced scrutiny, with the CMA in the UK concluding that Apple and Google have a tight grip over crucial mobile ecosystems. The CMA’s year-long study prompted a follow-up investigation into mobile browsers and cloud gaming, although progress has been held up after Apple and Google challenged the review before the Competition Appeal Tribunal.
