Monopoly chiefs to probe Apple and Google over phone market ‘stranglehold’
- Apple made a global profit of £80billion in 2021 while Google made £57billion
- Watchdog is concerned that tech giants are exploiting their dominance
- Such profits ‘above what would be expected in a properly competitive market’
- Apple and Google have an effective duopoly on mobile ecosystems, study found
Watchdogs are preparing to investigate the ‘stranglehold’ Apple and Google hold on mobile phone usage, browsers and apps.
The Competition and Markets Authority has signaled concerns that the tech giants are exploiting their dominance to make billions from consumers while stifling competition and innovation.
Significantly, it plans to open a full-blooded market investigation into the firms, which could force them to change operating practices without the need to wait for new laws.
The CMA pointed out that Apple made a global profit of £80billion in 2021 while the figure for Google was £57billion.
It said: ‘Although high profits are not necessarily a concern in themselves, these supra-competitive returns are consistently above what would be expected in a properly competitive market.’
The watchdog said a year-long study ‘found that Apple and Google have an effective duopoly on mobile ecosystems that allows them to exercise a stranglehold over these markets, which include operating systems, app stores and web browsers on mobile devices’.
The Competition and Markets Authority has signaled concerns that the tech giants are exploiting their dominance to make billions from consumers while stifling competition and innovation
Apple and Google (parent company Alphabet) are two tech giants that stand accused of exploiting their market dominance in mobile apps through their software platforms iOS and Android respectively to make ‘supra-competitive’ profits
CMA chief executive Andrea Coscelli said: ‘When it comes to how people use mobile phones, Apple and Google hold all the cards.
‘As good as many of their services and products are, their strong grip on mobile ecosystems allows them to shut out competitors, holding back the British tech sector and limiting choice. We all rely on browsers to use the internet on our phones, and the engines that make them work have a huge bearing on what we can see and do.
‘Choice in this space is severely limited and that has real impacts – preventing innovation and reducing competition from web apps. We need to give innovative tech firms, many of which are ambitious start-ups, a fair chance to compete.’
The Government has announced plans to set up a digital markets unit to police tech firms. It would be given powers to clamp down on predatory practices and fine companies up to 10 per cent of their global turnover.
However – given concerns about delays in setting up this new regime – the CMA is using existing competition laws to challenge Apple and Google. It also has Facebook, Instagram and Amazon in its sights. Dr Coscelli added: ‘We have always been clear that we will maximize the use of our current tools while we await legislation for the new digital regime.’
The CMA pointed out that Apple made a global profit of £80billion in 2021 while the figure for Google was £57billion
The CMA said 97 per cent of all mobile phone browsing is done through either Apple’s Safari or Google’s Android Chrome browser engines. Apple actively bans alternatives to Safari. The CMA is concerned that Apple has blocked access to cloud gaming services. These provide mobile access to high-quality games that can be streamed rather than individually downloaded.
As a result, iPhone and iPad users are forced to download gaming apps from the Apple store, generating big profits. In parallel, the CMA is launching a competition law investigation into Google’s rules governing apps’ access to listings on its Google Play store. An investigation is already under way into Apple’s App Store terms and conditions.
The Daily Mail and MailOnline are suing Google in the US for alleged anti-competitive behavior. This relates to the firm’s ability to exploit its dominance over online advertising and potentially manipulate news search results in a way that punishes online publishers.
Apple said it respectfully disagreed with a number of conclusions reached by the CMA, ‘which discount our investments in innovation, privacy and user performance – all of which contribute to why users love iPhone and iPad’.
It added: ‘We believe in thriving and competitive markets where innovation can flourish. Through the Apple ecosystem we have created a safe and trusted experience users love and a great business opportunity for developers.’
Google said: ‘Android phones offer people and businesses more choice than any other mobile platform. Google Play has been the launchpad for millions of apps, helping developers create global businesses that support a quarter of a million jobs in the UK.
‘We will continue to engage constructively with the CMA to explain how our approach promotes competition and choice while ensuring consumers’ privacy and security are always protected.’