UK confirms antitrust probe of Android-iOS ‘mobile duopoly’ focused on browsers and cloud gaming

The UK’s antitrust watchdog has moved to deepen its scrutiny of the Apple and Google mobile duopoly — kicking off an in-depth investigation into elements of the pair’s mobile ecosystem dominance by probing their approach toward rival mobile browsers and cloud gaming services which it’s concerned could be restricting competition and harming consumers.

The move follows a market study conducted by the Competition and Markets Authority (CMA) last year that led to a final report this summer which concluded there are substantial competition concerns — with the regulator finding the tech giants have what it described as “an effective duopoly on mobile ecosystems that allows them to exercise a stranglehold over operating systems, app stores and web browsers on mobile devices”.

At the same time, the CMA proposed to undertake what’s known as a market investigation reference (MIR) with two points of focus: One looking at Apple’s and Google’s market power in mobile browsers; and another probing Apple’s restrictions on cloud gaming through its App Store.

That proposal for an MIR kicked off a standard consultation process, with the regulator seeking feedback on the scope of its proposed probe, and today it’s confirmed the decision to make a market investigation — opening what’s referred to as a ‘Phase 2’ (in-depth) investigation which could take up to 18 months to complete.

The probe will focus on the supply of mobile browsers and browser engines; and the distribution of cloud gaming services through app stores on mobile devices, the CMA said today.

In a press release announcing the opening of the in-depth investigation, the CMA said responses to the consultation had shown “substantial” support for a fuller investigation into how Apple and Google “dominate the mobile browser market” and how “Apple restricts cloud gaming through its App Store”.

Its PR emphasizes the strategic importance of mobile browsers — noting that “most” people use a mobile browser at least daily to access online content, and adding that 97% of all mobile web browsing in the UK last year occurred on browsers powered by either Apple’s or Google’s browser engine — giving the pair huge power over users’ experiences.

On cloud gaming services, the regulator is concerned restrictions applied via mobile platforms could hamper growth of the developing sector, leading to UK gamers to “miss out”, as it puts it.

“Web developers have complained that Apple’s restrictions, combined with suggested underinvestment in its browser technology, lead to added costs and frustration as they have to deal with bugs and glitches when building web pages, and have no choice but to create bespoke mobile apps when a website might be sufficient,” it also wrote in the press release.

“Ultimately, these restrictions limit choice and may make it more difficult to bring innovative new apps to the hands of UK consumers. At the same time, Apple and Google have argued that restrictions are needed to protect users. The CMA’s market investigation will consider these concerns and consider whether new rules are needed to drive better outcomes.”

Commenting in a statement, Sarah Cardell, interim chief executive of the CMA, added:

“We want to make sure that UK consumers get the best new mobile data services, and that UK developers can invest in innovative new apps.

Many UK businesses and web developers tell us they feel that they are being held back by restrictions set by Apple and Google. When the new Digital Markets regime is in place, it’s likely to address these sorts of issues. In the meantime, we are using our existing powers to tackle problems where we can. We plan to investigate whether the concerns we have heard are justified and, if so, identify steps to improve competition and innovation in these sectors.”

If, during the course of the investigation, the CMA identifies features with an “adverse effect on competition” it can impose corrective remedies directly on the companies — and may also make recommendations to other public bodies (like sectoral regulators or the government) if it sees a need for new legislation to counteract damaging activities.

Apple and Google respond

In a 15-page response to the consultation that the CMA has published today, Apple argues against the opening of an MIR into either mobile browsers or cloud gaming — denying its activity around mobile browser comprises a restriction on competition and playing up a claim that its development of the WebKit browser engine allows for “the security, privacy and performance of devices to be preserved”, while also warning of “severe risks” if rival browsers are able to deploy new features without “an in-depth evaluation of their security and privacy implications”.

On cloud gaming, it also denies any anti-competitive behavior — claiming it does not prevent cloud gaming apps from appearing on the App Store, and further asserting it is not trying to block the emergence of cloud gaming apps, while again playing up a claimed concern for consumer protection.

“Apple’s approach provides users with a valuable choice, centred on security, privacy and performance, between ecosystems,” the iPhone maker also writes in the response, emphasizing a claim that its approach to security and privacy “offers consumers a clear alternative to the Android system, providing them with a real choice across these key parameters of competition”; and further warning: “The potential remedies under contemplation by the CMA risk removing this choice and thus actively restricting competition at an ecosystem level. Any action that would result in such a loss of consumer choice and competition should be avoided.”

In its own 10-page response to the consultation, Google plays up Android’s “openness” — claiming its smartphone platform offers “users and businesses more choice than any other”.

It also argues that the main issues identified by the CMA at that stage are not found on its mobile ecosystem — further suggesting restrictive behaviors the regulator is most concerned about apply to Apple’s iOS, not Android, and thereby seeking to divert regulatory scrutiny onto its rival.

Google further argues that remedies proposed by the CMA (such as choice architectures) would be better suited to “iterative development and collaborative discussions” between industry and a dedicated unit within the CMA which is focused on Big Tech (aka the Digital Markets Unit; DMU). It argues that such remedies are not “well suited for consideration or implementation in the context of a market investigation” — which looks like an attempt to steer off/delay a CMA intervention (since the DMU has not yet been empowered as the UK government delayed introducing the necessary legislation — ergo waiting for the Unit to be able to take on such a ‘co-design’ role could take years).

Offering an overview of responses to the consultation, the CMA said it received 31 (out of 43) that were supportive of going ahead (with a further 6 supportive while pushing for a broader scope); and just 5 against — with Apple offering what it couched as the strongest opposition.

Responses in favor included 22 web developers and software engineers, several browser vendors, as well as individuals and advocacy groups, it added, specifying that “most were critical of Apple’s restrictions in these areas”.

“While we understand the rationale presented by some stakeholders to expand the scope into additional areas including for example desktop devices and general search, we have chosen to retain the scope described above,” the CMA goes on in a note on the scope of the MIR. “This is on the basis that a targeted investigation will be more manageable to deliver results in a timely manner. However, we are mindful of the links between browsers and search services, both from user experience and financial perspectives, which we will take into account when assessing competition in the supply of mobile browsers and potential remedies.”

“With respect to cloud gaming, the focus of this investigation will be solely in relation to the access that such services have to app stores on mobile devices. As such, the investigation will not look more broadly at the market for cloud gaming services or the strength of competition between suppliers of cloud gaming or competition in gaming more generally,” it also specifies.

Apple and Google were contacted for a response to the CMA’s newest investigation of their business activity.

An Apple spokesperson sent us this statement:

“Apple believes in vibrant and competitive markets where innovation can thrive. Through the App Store, we’ve helped millions of developers turn their brightest ideas into apps that change the world, spurring an app economy that supports hundreds of thousands of jobs in the UK alone. We will continue to engage constructively with the Competition and Markets Authority to explain how our approach promotes competition and choice, while ensuring consumers’ privacy and security are always protected.”

A Google spokesperson also provided a statement:

“Android gives people a greater choice of apps and app stores than any other mobile platform.  It also enables developers to choose the browser engine they want, and has been the launchpad for millions of apps.  We’re committed to building thriving, open platforms that empower consumers and  help developers build successful businesses.”

The CMA already has an open investigation into Apple’s App Store, which it opened in March 2021 — looking at the T&Cs Cupertino imposes on third party developers seeking to distribute mobile apps on iOS. That probe remains ongoing.

While, in May this year, it opened a formal investigation into Google’s adtech stack — a few months after announcing it would probe allegations of collusion between Google and Facebook over ad bidding (aka the ‘Jedi Blue’ claims). Both of which are also still in train.

The CMA has also previously conducted a deep dive study into online advertising which raised a raft of competition concerns and convinced it of the need to press the case for digital competition law reform. (Albeit, the latter is still a work in progress under the current UK government.)

The UK competition regulator also continues to closely monitor Google’s online advertising proposal to deprecate support for third party tracking cookies in its Chrome browser and bring in a different bundle of ad targeting technologies (aka Privacy Sandbox) — a recent intervention that looks likely to contribute to shaping a core replacement adtech stack (meaning it could be highly influential for the future of the ad-supported web), even while it’s likely to slow down that migration-evolution process since Google has had to, for example, build in more fulsome consultations with industry players to ensure it’s complying with its regulatory commitments to the CMA.

So the regulator has a growing suite of investigations and other activity focused on addressing the market power of Apple and Google — with what looks like more interventions coming down the pipe for their mobile ecosystems.