CMA seeks global approach to regulation of mobile ecosystems

Out-Law News | 20 Dec 2021 | 2:59 pm | 2 min. read

An international approach to the regulation of mobile ecosystems has been advocated by the UK’s Competition and Markets Authority (CMA) after it highlighted that market conditions in the UK can be affected by decisions taken by authorities elsewhere.

The CMA expressed the views in an interim report on its ongoing market study into mobile ecosystems in the UK (445-page / 4.39MB PDF). The study is assessing competition in relation to mobile devices, operating systems and apps, and has focused on the role Apple and Google play as gatekeepers to mobile markets for consumers and rival businesses.

In its report, the CMA recognised the role Apple and Google have played in delivering and enabling innovation in mobile markets and highlighted the high levels of user satisfaction with their ecosystems. However, it raised concerns with the market power the companies enjoy and suggested regulatory interventions may be necessary to improve competition in some mobile markets.

According to the regulator, potential interventions could aim to support user switching between devices run on Apple and Google’s different operating systems without the loss of functionality or data, or at enabling users to install apps on their devices from methods other than through the Apple App Store or Google Play Store.

The CMA has also identified scope to give users more choice about how they pay in-app for things like game credits or subscriptions, rather than being tied to Apple’s and Google’s own payment systems, and further measures to promote user choice around and alternatives to Apple and Google services, like browsers, are also floated in the report.

The CMA is expected to publish its final report by 14 June 2022. However, it has already decided not to refer the issues it has identified for deeper scrutiny in a market investigation (2-page / 113KB PDF). Instead, it indicated that it believes the new Digital Markets Unit (DMU), established in April 2021, is best placed to implement any necessary interventions once it obtains its statutory powers.

The DMU’s main task will be to regulate businesses that it deems to have ‘strategic market status’ (SMS). Businesses designated as having SMS will need to comply with bespoke codes of conduct and their planned corporate transactions will be subject to the DMU’s oversight under a special merger control regime. The DMU will also have powers to open markets to greater competition and to address the root causes of a firm’s substantial and entrenched market power through pro-competitive interventions.

The CMA said that it believes a mix of codes of conduct and pro-competitive interventions could address the initial concerns it has raised about competition in some UK mobile markets.

The regulator’s report, however, also provided details of policy making and regulatory action elsewhere in the world that could have an impact on the way mobile markets operate, from the EU’s plans for a new Digital Markets Act to other legislative proposals in the US and South Korea as well as “private enforcement cases”. It said a coordinated approach to regulation of mobile ecosystems globally would be better than individual countries and regulators taking unilateral action.

“Further action by other authorities could potentially result in changes that would affect market conditions in the UK,” the CMA said. “We continue to monitor the work carried out in other jurisdictions and, in turn, aim to contribute to the global debate on how to tackle the problems associated with digital platforms with substantial market power. This reflects our belief that the most effective way to promote competition in these markets will be through action that is internationally coherent, by achieving a common understanding of the problems and broad agreement over the way to tackle them.”