Ouch: UK regulators to investigate Apple after it loses appeal

A UK investigation into Apple’s and Google’s dominance of the markets for mobile browsers and cloud gaming will go ahead as a local antitrust regulator has won an appeal against a previous ruling that had blocked its work.

The story so far…

The UK Competition and Markets Authority began investigating both companies last year. Part of that probe looked at how Apple might be restricting the cloud gaming market by restricting such spaces on its App Store.

The regulator at the time said, “Apple’s restrictions in particular are holding back potentially disruptive innovation that could transform the way that consumers access and experience content online.”

Things moved relatively fast, but Apple appealed the decision to launch the investigation on the basis that the CMA inquiry began too late. The Competition Appeal Tribunal subsequently upheld Apple’s argument in March. The CMA then appealed that judgment and succeeded when the UK Court of Appeal overturned that decision today.

You can read the latest judgment in full here.

Regulators will now go ahead and investigate

This effectively means the investigation will take place. If the agency finds against Apple, it could impose remedies that include insisting browsers be able to use rendering engines other than WebKit or mandating inclusion of cloud games services within the App Store.

The three main strands of the investigation relate to:

• How control of the browser market affects developers. 
• The insistence that browser developers use WebKit.
• Apple’s refusal to permit cloud gaming services/portals on the App store.

The CMA has the power to require Apple to make certain changes. It could, for example, insist browsers on Apple’s devices be able to use different rendering engines, or require Apple to include cloud games services on the App Store, or other remedies.

Does Apple now have plans in place to mitigate?

While Apple continues to put up a solid defense to protect its existing business practices, it also seems possible the company has used the time it bought constructively to blunt the impact of any declared remedies.

Last December, we heard reports the company had assembled an internal team to focus on how to meet regulatory demands. That team might be working on introducing support for non-WebKit browsers and third-party payment systems.

Many of the changes Apple does decide to put in place should be implemented by the time EU regulations requiring they be made go into effect in March 2024.

One of the bigger changes the team seems to have been working on may be the introduction of support for sideloading of applications, which we think the company now has some basic infrastructure to support. That change had originally been half-expected to see the light at WWDC, though likely confined to the EU, and (now) potentially the UK.

What’s really at stake?

It’s likely Apple hopes that if it handles the process of bringing itself in line with the increasingly regulated environment around its business it can also continue to offer customers the choice to stay with the security and convenience its App Stores already provide.

This likely means it will continue to offer customers curated products and services, but will also offer more portals for those who want to set foot outside its walled garden — at the customer’s own risk, naturally, and potentially subject to a customer access charge.

In the background, Apple continues to evangelize for its App Store business. Buried within the news of this year’s App Store Award winners, the company stressed the value the App Store already delivers to global economies. The store, “facilitated $1.1 trillion in developer billings and sales in 2022,” the company said, 90% of which goes directly to developers, commission-free. In June, the company pointed out that the iOS app economy supports over 4.8 million jobs across the US and Europe.

The unspoken warning woven is, of course, an urge that governments and regulators avoid putting too much weed killer on the App Store’s Magic Money Tree if they want the digital good times to continue to roll.

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