The UK Competition and Markets Authority (CMA) has closed its existing Competition Act cases into Google’s Play Store and Apple’s App Store as it plans for the roll out of the new digital markets competition regime.
While the CMA has not taken any decisions on what digital activities or harms it will tackle first, it anticipates that its early work under the new digital markets competition regime will build on and leverage its experience in areas it has already studied, such as mobile ecosystems, which includes app stores.
The CMA opened these cases because it is concerned that Google and Apple are using their market positions via the Play Store and App Store respectively to set terms which may be unfair to UK app developers and which may restrict competition and consumer choice, potentially leading to higher prices and reduced choice for app users.
The cases focused on the rules that require app developers offering digital content, such as games, to use Google Play’s or Apple’s own billing systems for in-app purchases, which the CMA is concerned limit developers’ choice of payment solution and make it more difficult for them to deal directly with their customers.
The move comes at the same time as the CMA rejects commitments submitted by Google in response to the CMA’s concerns. Google’s proposals would have given app developers the ability to use alternative payment options to Google Play’s billing system, under proposals known as ‘Developer-only Billing’ (DOB) and ‘User Choice Billing’ (UCB).
Having consulted app developers, and after reviewing their feedback as well as the available evidence, the CMA is not satisfied that Google’s proposed commitments address its competition concerns effectively.
Feedback from app developers suggested Google’s proposals to allow app developers to use alternative payment methods for in-app payments did not go far enough and they would in practice remain tied to the Google payment system. In particular, app developers referred to the level of commission they would still be paying to Google, and to the proposed ‘pop-up screens’ that might put users off completing a transaction.
In light of recent developments, in particular the passing in May of the Digital Markets, Competition and Consumers Act (DMCCA), the CMA has assessed its existing Competition Act investigation into Google’s Play Store and its parallel case into Apple’s App Store rules against its administrative priorities and decided to close these cases at this point.
Should Apple or Google each or both be designated as having ‘strategic market status’ in connection with any digital activities in the mobile sector, the CMA will be able to use its new powers to consider the range of issues raised by parties more holistically than it otherwise could under these specific Competition Act investigations. This will also enable the CMA to consider what, if any, interventions may be needed following any designation.
