The U.K.’s Competition and Markets Authority (CMA) is proposing significant changes to the mobile ecosystems of Apple Inc. AAPL and Google, a subsidiary of Alphabet Inc. GOOGL GOOG, following an investigation into their market dominance.
What Happened: The CMA is considering designating Apple and Google with "strategic market status" or SMS, a status given to companies with substantial and entrenched market power in the UK’s digital activities. This could lead to changes in their app stores and mobile ecosystems, CNBC reported. The CMA has been investigating the matter since January.
The CMA's investigation examined whether Apple and Google's mobile platforms create obstacles that hinder competitors from providing alternative products and services. It also looked into whether the tech giants are using their position to favor their own apps and services and if they impose unfair terms and conditions on developers.
The CMA has identified several consumer and business concerns, including inconsistent app review processes, unpredictable app store search rankings, and the up to 30% commission charged by Apple and Google on some in-app purchases.
Google’s Android operating system holds over 61% of the UK market share, while Apple’s iOS has just over 38%. The CMA has proposed immediate and long-term changes, including a review of app distribution processes and the possibility of allowing alternative app stores on iOS.
Why It Matters: The CMA’s move is part of a broader trend of European regulators scrutinizing big tech companies. On Wednesday, it was reported that Apple was likely to avoid daily fines from the EU by accepting changes to its App Store rules and fees.
In June, Apple announced new terms allowing developers in the EU to promote external purchase offers, a significant compliance step under the Digital Markets Act.
Meanwhile, Google offered to boost rivals in its search results to avoid a hefty fine from the EU. These developments indicate that European regulators are taking a more proactive approach to ensure fair competition in the tech industry.
On a year-to-date basis, Apple dropped 11.97%, while Google edged 0.86% higher, as per Benzinga Pro.
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