UK Regulator Closes Probe Into Apple and Google App Stores, Citing Shifting Priorities

LONDON — The U.K. competition regulator has closed its investigations into Apple’s App store and Google’s Play Store on the grounds of shifting “administrative priorities” as it prepares to rollout stronger enforcement powers over tech companies.  

The Competition and Markets Authority (CMA) opened an investigation into Apple in 2021 following complaints from developers over the way that the California-based tech giant operates its app store. 

For many years, developers and app makers have complained about Apple’s restrictions to outside developers and the up-to-30% fee it charges them on all purchases made through its app store. 

Two of the company’s biggest critics have been Spotify and Fortnite developer Epic Games with the latter taking its fight against Apple through the U.S. courts (Epic eventually lost the case, but in the process a California ordered Apple to make changes to how its store operates, including allowing links to outside platforms and third-party services).  

The CMA opened a separate investigation into suspected anti-competitive conduct by Google in relation to its own app store in June 2022. 

Both of those probes have now been dropped, the competition watchdog announced Wednesday (Aug. 21), pending reforms to U.K. competition and consumer protection laws, which are due to come into force later this year under the Digital Markets, Competition and Consumers Act (DMCCA).

The act, which was passed by the previous government administration in May, grants the CMA new and expanded powers over how large digital companies operate in the United Kingdom, including the ability to directly impose fines of up to 10% of global annual turnover for firms found to be breaching consumer protection and competition laws.

“Once the new pro-competition digital markets regime comes into force, we’ll be able to consider applying those new powers to concerns we have already identified through our existing work,” said Will Hayter, executive director for digital markets at the CMA, in a statement. 

The CMA said that should Apple or Google each or both be designated as having “strategic market status” – a categorization that requires global turnover of more than £25 billion or U.K. turnover of more than £1 billion — it will be able to use its new powers to investigate the companies “more holistically” than it could under its now-closed probes. 

The regulator said it expects to launch three to four investigations into companies with strategic market status (SMS) within the first year of its new powers coming into force. If the CMA finds businesses are using their status to gain an unfair competitive advantage, it says it will take “targeted and proportionate action” to address their behavior.

The CMA also said that it has rejected new commitments from Google that would have given app developers the choice of using alternative payment options to Google Play’s billing system, under proposals known as “Developer Only Billing” and “User Choice Billing.” Those proposals failed to “address its competition concerns effectively,” said the CMA. 

In response, a spokesperson for Google said the company has actively engaged with the regulator throughout their investigation and has “made a number of significant commitments to further broaden the billing options available to developers through Google Play.”  

Google says that its fees are the lowest charged by major app stores with 99% of developers qualifying for a service fee of 15% or less. The company says that in 2022 its Android app business generated almost £10 billion in revenue for British developers and supported over 457,000 jobs in the U.K. Apple did not respond to requests for comment when contacted by Billboard.

The CMA’s warning that it will continue to closely monitor the tech sector over competition concerns and may reopen further inquiries in the not-too-distant future comes as regulators and politicians around the world look at ways to curb the dominance of tech giants like Apple, Amazon, Google and Meta. 

In March, the European Commissioned fined Apple 1.8 billion euro ($1.95 billion) for breaking competition laws and unfairly favoring its own music streaming service over rivals including Spotify. [Apple appealed in May.]

The company has also been forced to make a number to how its App store operates in the 27-member EU trading bloc as a result of the European Union’s Digital Markets Act (DMA), which officially came into force in 2022, although companies had until March this year to comply with its terms. 

The Digital Markets Act requires tech companies trading within the EU region to open up their services and platforms to other businesses and allow them to operate more freely. 

For music streaming services like Spotify that means it is now able to list pricing information inside its app for European users – an update that is “something as obvious as it is overdue,” the company said in a blog post earlier this month. Freemium Spotify users looking to upgrade can also see special introductory offers and the pricing once a promotion ends.

While Spotify has welcomed the gradual loosening of restrictions, it says its long-running battle with Apple isn’t over and continues to criticize the company for preventing EU iOS users from purchasing subscriptions in-app because of what it describes as “illegal and predatory taxes Apple continues to demand, despite the [European] Commission’s ruling.”