Proposed British Law Could Ruin Apple's Market Share In UK

The UK has proposed a new agency, called the Digital Markets Unit (DMU), to "suspend, block and reverse" commercial decisions made by Tech Giants. 

What Happened: The Competition and Markets Authority (CMA) regulates anti-competitive behavior in the UK. To rein in companies like Apple Inc. AAPL, Facebook, Inc. FB, and Alphabet Inc. GOOGL, the CMA has proposed the Digital Markets Unit.

According to the proposal, "The Digital Markets Unit (DMU) will be given the power to designate tech firms that hold substantial and entrenched market power with 'Strategic Market Status' (SMS). This will require them to follow new rules of acceptable behavior with competitors and customers in a move that will benefit the public and drive growth and innovation across the economy."

Apple undoubtedly qualifies for Strategic Market Status, and the DMU would most heavily target Apple's App Store. Regulators have long criticized the App Store for giving Apple a complete monopoly on app sales and distribution. 

Why It's Important:  If the agency is approved, Apple would no longer have full autonomy over commercial decisions in the UK. The main goal of the Digital Markets Unit is to increase competition, so British startups have a better chance of success against American companies. 

However, leveling the playing field would require that the DMU use its powers to reduce Apple's market share in the UK. In mobile phones, Apple owns almost half of the UK market, and according to iNews in the fiscal year 2019, the company made $1.7 Billion in sales from the UK. 

To reduce these numbers, the agency could even be given the power to stop mergers and prevent tech companies from making changes in algorithms. 

The UK's Digital Secretary, Oliver Dowden, said that "The UK's tech scene is thriving, but we need to make sure British firms have a level playing field with the tech giants, and that the public gets the best services at fair prices."

The Digital Markets Unit has been a long time coming. Apple has been hit with patent infringement lawsuits and numerous other legal actions in the UK.

The agency will use public consultation to determine if the proposed powers are acceptable.