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LONDON — Britain’s competition regulator on Thursday launched an investigation into Apple and Google’s huge mobile ecosystems to determine whether the tech titans are in breach of the U.K.’s strict new digital competition rules.
The U.K. Competition and Markets Authority said it was opening dual probes into both U.S. tech giants to assess whether they hold “strategic market status” in their respective mobile ecosystems, including operating systems, app stores and smartphone-based browsers.
The investigations will “explore the impact on people who use mobile devices and the thousands of businesses developing innovative services or content such as apps for these devices,” the CMA said.
“Apple believes in thriving and dynamic markets where innovation can flourish,” an Apple spokesperson told CNBC. “We face competition in every segment and jurisdiction where we operate, and our focus is always the trust of our users.”
“In the U.K. alone, the iOS app economy supports hundreds of thousands of jobs and makes it possible for developers big and small to reach users on a trusted platform,” the Apple spokesperson added. “We will continue to engage constructively with the CMA as their work on this matter progresses.”
Oliver Bethell, Google’s senior director for competition, said the company’s Android platform “has helped to expand choice, reduce prices and democratise access to smartphones and apps.”
“It’s the only example of a successful and viable open source mobile operating system,” said Bethell, urging for a “way forward that avoids stifling choice and opportunities for U.K. consumers and businesses alike, and without risk to U.K. growth prospects.”
Earlier this week, the U.K. replaced CMA Chair Marcus Bokkerink with Doug Gurr, a former Amazon U.K. country manager. At the time, the watchdog noted that regulators had been asked in a recent meeting with the government to “tear down the barriers hindering business and refocus their efforts on promoting growth.”
Labour MP Dan Aldridge said via email that the launch of the CMA’s investigation into Apple and Google was “a crucial step forward in ensuring fair competition in our digital economy.”
“Companies such as Apple and Google decide which ones we access and how much we pay,” he said in an emailed comment Thursday. “These investigations will examine these practices, as they can stifle innovation and lead to higher prices for consumers.”
New powers
The CMA now has enhanced regulatory powers after a new U.K. law, called the Digital Markets, Competition and Consumers Act, or DMCC, came into effect at the start of this year.
The DMCC seeks to prevent anti-competitive behavior in digital markets. It can designate large companies that have a significant amount of market power in a certain digital activity as having “strategic market status.”
The CMA now has the power to impose changes to prevent potential anti-competitive behavior from any firm that is given strategic market status.
According to the regulator, virtually all mobile devices sold in the U.K. are pre-installed with either Apple’s iOS or Google’s Android operating systems, and their app stores and browsers have either exclusive or leading positions on their platforms compare to alternative products and services.
Almost all (94%) of people aged 16 or above — about 56 million consumers — in the U.K. currently have access to a smartphone and the average Brit spends around three hours a day using a mobile device, the CMA added.
The body said it would examine three key issues, including the extent of competition between Apple and Google’s mobile ecosystems, possible leveraging of the tech giants’ market power into other activities and potential exploitative conduct.
“More competitive mobile ecosystems could foster new innovations and new opportunities across a range of services that millions of people use, be they app stores, browsers or operating systems,” Sarah Cardell, chief executive of the CMA, said in a statement Thursday.
“Better competition could also boost growth here in the UK, with businesses able to offer new and innovative types of products and services on Apple’s and Google’s platforms,” Cardell added.
