Apple, Google face legal pressure over UK mobile services dominance

Apple faces yet more regulation as the UK’s competition watchdog launches an investigation into how Apple and Google dominate the market for mobile services.

Control the internet by controlling the browsers

The Competition and Markets Authority (CMA) has said it will now investigate both companies for their dominance around browsers, app stores, and cloud gaming.

For insight into that dominance, the CMA points out that 97% of all UK mobile web browsing makes use of either Apple or Google’s browser engine.

The regulator published an initial report in June.

Now it has decided to proceed to a full investigation as browser vendors, web developers, and cloud gaming service providers have complained that the status quo limits innovation and raises costs. As we know, both Apple and Google argue the controls they put in place are designed to protect users.

There are two primary cores to the complaints: the impact of browser control on web developers and that of App Store control on cloud games distribution.

The problem with browsers

Web developers argue that Apple’s restrictions, combined with suggested underinvestment in its browser technology, lead to added costs and frustration as they must deal with bugs and glitches when building web pages. They contend that they have no choice but to create bespoke mobile apps when a website might be sufficient.

“Apple’s restrictions in particular are holding back potentially disruptive innovation that could transform the way that consumers access and experience content online,” the CMA claims.

The CMA also states that weak competition in the browser market is in part down to the fact that Safari and Chrome are preinstalled on mobile devices. It also says Apple’s demand that all iOS browsers make use of WebKit, the engine that drives Safari, limits market development and innovation.

Criticisms around cloud gaming

When it comes to cloud gaming services, the CMA is critical that Apple does not permit them to be listed on the App Store.

Under the company’s guidelines, apps that offer access to collections of games aren’t permitted. Those games must be individually submitted and then approved by Apple.

The regulator will be looking at what access cloud gaming services have to app stores on mobile devices. To me, this seems a little odd, given that these games can usually be accessed via browsers.

What the regulator said

“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,” Sarah Cardell, CMA interim chief executive said.

“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.”

The investigation will now begin.

What happens now

The CMA must finish its investigation within 18 months.

If it decides either Apple or Google has an adverse effect on competition, it has the power to impose remedies on the businesses, or to suggest legislation it thinks may be required.

For example, Apple may be required to support browser engines other than WebKit or to provide a choice of browsers during device setup to “overcome the distortive effects of pre-installation.”

Apple may also be required to remove its App Store restrictions on cloud gaming services.

Apple’s legal challenges grow

The decision to launch the investigation adds to the regulatory pressure Apple is now experiencing. Most recently, the EU revealed plans to force the company to support third-party app stores and to make various changes to its operating systems and more. Apple will likely be forced into compliance, just as feels it has been driven to move to USB-C in future hardware products.

The company is also facing investigations into its messenger apps, controversy around its advertising business and app tracking transparency, and faces additional challenges, including:

• A CMA investigation into Apple’s conduct in relation to the distribution of iOS apps
• The Dutch Authority for Consumers & Markets decision around dating apps and payments
• South Korean legislation that requires app stores to support alternative payment systems
• Investigations by the Japan Fair Trade Commission and the Competition Commission of India into various restrictions imposed by Apple on developers in relation to tools for app development and payment for apps
• Numerous actions in the US, China, and the Netherlands

What should the balance be?

Other than coughing up a lot of cash for legal representation throughout these processes, for Apple the challenge will be to figure out how to protect its user experience against the steady erosion of its control.

At what point will lawmakers regulate platform innovation out of existence to give cloud games services a chance to make a buck? What balance will be set between the secure OS provision and user safety and the opportunity to build a business on those platforms? And when will regulators move beyond lip service in order to legislate against the surveillance-as-a-service industry on any platform?

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