Apple and Google have a “vice-like grip” over people’s mobile phones and their duopoly over the market should be investigated by the proposed new “big tech” regulator, the UK’s competition watchdog has said.
The two companies effectively control users’ mobile phone experience in the UK, with Apple’s iOS and Google’s Android operating systems installed on 99.45% of all phones in use in the country.
“Apple and Google have developed a vice-like grip over how we use mobile phones and we’re concerned that it’s causing millions of people across the UK to lose out,” said Andrea Coscelli, the chief executive of the Competition and Markets Authority ( CMA), which published its interim report investigating the dominance of the tech giants in the UK mobile ecosystem on Tuesday.
Once a consumer buys a phone they are essentially married to the ecosystem of one of the two companies – Apple’s App Store or Google’s Play Store and their respective web browsers Safari or Chrome.
The CMA said the two Silicon Valley giants can control the content phone users can access, “tilt the playing field” towards their own services, and stifle competition by blocking rivals’ services and pre-installing their own software on devices.
“Most people know that Apple and Google are the main players when it comes to choosing a phone,” said Coscelli. “But it can be easy to forget that they set all the rules too – from determining which apps are available on their app stores, to making it difficult for us to switch to alternative browsers on our phones. This control can limit innovation and choice, and lead to higher prices – none of which is good news for users.”
The CMA said it was concerned that this was leading to less competition and meaningful choice for customers, who are missing out on the full benefit of new products and services, such as cloud-based gaming offered by firms not supported by Apple or Google.
Coscelli said that if a move was made to curb the power of the duopoly and open up more choice and competition in the mobile phone market it should be handled by the Digital Markets Unit (DMU), which is in the process of being set up with a remit to crack down on the behavior of tech giants.
The new DMU, which will be part of the CMA, has been set up in shadow form until the government officially legislates to grant it regulatory powers. The DMU will enforce a code of conduct that the tech giants must follow when dealing with rivals and third parties based on “fair trading, trust and transparency”.
The code will affect only those companies deemed to have strategic market status (SMS), although no tech firms have been officially awarded that status yet.
“Any intervention must tackle the firms’ substantial market power across the key areas of operating systems, app stores and browsers,” said Coscelli. “We think that the best way to do this is through the Digital Markets Unit when it receives powers from the government.”
The CMA said that given the scale of Apple and Google they will qualify for SMS and be subject to the DMU’s regulatory overview. The “prioritisation criteria” for a company to be given SMS status is that it earns more than £1bn in UK revenues, or £25bn globally.
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Apple will make in excess of £82bn in profits this year, while Google made £36bn in profits last year.
“We want the UK to remain a place where all tech firms can thrive and this study underlines the importance of ensuring mobile app stores are fair and competitive,” said Chris Philp, the UK government’s tech and digital economy minister.
“Our new pro-competition regime will level the playing field between tech giants and smaller businesses and prevent abuses that could curtail growth and innovation. We are grateful for the CMA’s work to date and look forward to the final recommendations.”
A spokeswoman for Apple said: “Apple believes in thriving and dynamic markets where innovation can flourish. We face intense competition in every segment in which we operate. We will continue to create new opportunities for developers while protecting our user’s privacy and security.”
She added: “Our rules and guidelines are constantly evolving, and we have made many recent changes that benefit developers and consumers alike. We will continue to engage constructively with the UK Competition and Markets Authority as their work on this study progresses.”
A Google spokesperson said: “Android provides people with more choice than any other mobile platform in deciding which apps and app stores they use. The Android app ecosystem also supports nearly a quarter of a million jobs across thousands of app developers and phone-maker businesses in the UK. We’re committed to building thriving, open platforms that empower consumers and help developers succeed.”