The UK's antitrust authority is finally considering taking action against the mobile duopoly of Apple and Google.

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The final report from the UK's competition watchdog on a year-long mobile ecosystem market research has been released, confirming the competition watchdog's belief that there are significant issues about Apple and Google's market clout that demand regulatory involvement.

In December, the company's preliminary report on the market research raised issues and suggested various solutions for addressing lock-in and opening up the pair's "essentially self-contained ecosystems," such as making switching simpler for customers and lowering obstacles for app developers.

The Competition and Markets Authority (CMA356-page )'s final report examines a smorgasbord of competition concerns related to how Apple and Google operate their respective, dominant mobile ecosystems, iOS, and Android — and delves into topics as diverse as Apple's App Tracking Transparency feature, a Google developer revenue-sharing agreement codenamed 'Project Hug,' and the merits of developing web apps that include a UI component.

The CMA summarises its findings in a news statement accompanying the research, claiming that Apple and Google "control all the cards" in the mobile ecosystems market, and that action is required "to provide innovators and rivals a fair chance to compete."

While industry observers may have a sense of déjà vu, given the CMA's preliminary report from last year, which highlighted some of the same issues and addressed potential solutions, this time the UK regulator is taking action. Although the processes involved are lengthy, it might be years before it is in a position to intervene and mandate changes to how the internet giants operate in response to the issues raised in its report. But, at the very least, the train is leaving the station now.

The CMA is now proposing to launch an in-depth investigation into Apple and Google's market dominance in mobile browsers, as well as Apple's limits on cloud gaming through its App Store. (Note: Before opening a market investigation reference, or MIR, based on existing competition powers, the regulator is required to consult.)

In terms of mobile surfing, the CMA is worried about Apple's iOS prohibition on non-WebKit-based browsers, which it believes significantly limits rival browsers' ability to differentiate themselves from Apple's Safari, as well as limiting Apple's incentive to continue developing its own browser.

The CMA is also concerned about how Apple's iOS prohibition on non-WebKit-based browsers restricts the capabilities of web apps, making them less competitive with native apps (which Apple of course monetizes via its App Store fees).

The planned MIR appears to cover mobile browser defaults as well, with the CMA stating that mobile devices often come with either Google's Chrome or Apple's Safari pre-installed and configured as default when purchased, "providing them a crucial edge over other competing browsers."

On cloud gaming, the CMA says it wants to look at Apple's decision to restrict these services from its App Store and how this may be damaging consumers, such as if it's preventing the industry from expanding. It goes on to say that gaming applications are a major source of income for Apple, implying that the technology might pose a challenge to the company's dominance in in-app distribution.

It will hold a public hearing on the proposed MIR through July 22.

At the same time, the regulator is stating that it will take enforcement action against Google over its app store payment procedures, claiming that the tech behemoth is engaging in anti-competitive behavior.

This competition law inquiry will look into Google's rules governing app access to the Play Store, including the restrictions it sets for how users can pay for digital goods in-app. (Note: The CMA is already investigating Apple's App Store, which was revealed in March of last year — thus this appears to be a mirror move to address Google's practices, but one that will likely lag behind the more advanced inquiry into Apple's app store rules.)

The CMA has chosen to kick up a gear now, according to its report, since mobile developers have been complaining to it in the months after its original investigation raised a slew of competition issues.

However, the CMA is now acting under its existing powers as a result of the UK government's decision to postpone a planned ex-ante reboot of digital competition rules (which the CMA had previously envisioned as the best vehicle to address antitrust concerns linked to Big Tech market power, including in mobile) — hence its report acknowledging (almost regretfully) that "we now understand this [legislation to empower the Digital Ma]

So, because the UK government has failed to prioritize the essential ex-ante changes, the UK's competition regulator is forced to rely on its present (ex-post) competition authorities to address serious and persistent antitrust concerns about fast-moving digital behemoths.

“[T]he DMA will be one starting point for Apple and Google when deciding how to address these international competition concerns, many of which are similar to ours,” the CMA writes in a chapter of the report discussing international developments. “As a result, Apple and Google may make changes to the mobile ecosystem that will address some of the current restrictions on effective competition on a global basis, which could resolve the competition concerns that have been raised in several jurisdictions, including the UK.”

One slight potential upside of the UK’s legislative delay on digital competition reform is that the CMA has at least used this interim period to undertake detailed scrutiny of the mobile market — the consequences of which are likely to be long and deep, as the regulator suggests its conclusions will feed future interventions by the DMU, aka the dedicated unit established inside the regulator last year to oversee a “pro-competition” regime in digital markets that are intended to target the most powerful platforms (but still lacks the necessary legislation).

“We expect the findings of this market study to be an input into any DMU assessment of whether Apple and Google should be designated with SMS in particular activities,” the CMA writes, making a reference to Strategic Market Status; aka the status in the planned reform that would mean they are in-scope of the future ex-ante code of conduct (and also able to be subject to so-called ‘pro-competition interventions’ which are set to be tailored per entity, not one-sized fits all). “The study will also inform the appropriate range and design of potential interventions that the DMU could put in place, where it to find either Apple or Google to have SMS.”

“Our expectation based on the findings in this study and the evidence to date is that Apple and Google would meet the criteria (as currently outlined in the government’s consultation response) to be found to have SMS in respect of the following activities within their ecosystems; mobile operating systems (and for Apple, together with the mobile device on which it is installed, to the extent these are inextricably linked), native app distribution, and mobile browsers and browser engines. As a result, we expect that the interventions which we have considered in this study would generally be in the scope of the new regime,” it adds.

The UK regulator will surely be hoping that time spent waiting for the government to empower the DMU can — eventually — turn into future enforcement gains, i.e. once the DMU is on a proper legal footing, and as a result of its undertaking all this comprehensive market analysis in the meanwhile. (The CMA has previously done a deep dive into the digital advertising market — where it also concluded there are major structural problems with Google but, similarly, opted to wait for the government to legislate.)

But there’s no doubt the government’s decision to kick the reform down the road means tech giants like Apple and Google have bought themselves a lot more time to keep extracting UK rents.

Since the bloc has already decided on its own ex-ante competition legislation (the Digital Markets Act; DMA), which is expected to come into force early next year, the CMA's research recognizes that European Union law might wind up having a first-mover influence on strategic digital market power. So much for Brexit regaining regulatory power, then!

The goal of a market study is to see if there are any aspects of a market that are hurting competition (aka AEC).

If the CMA determines that an AEC exists, it has a variety of (existing) powers to impose its own remedies, including the ability to impose behavioral requirements or even order the sale of portions of a business, as well as make recommendations to other bodies (such as sectoral regulators or the government) for other appropriate interventions to support improving competition.

However, such interventions are unlikely to provide immediate outcomes since they can take time to implement, and there's a good chance that enforcement orders will be challenged. So, once again, any solution to the Apple-Google oligopoly in the United Kingdom will be slow.

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