Britain takes aim at Apple and Google’s dominance in smartphones

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By Paul Sandle

LONDON (Reuters) -Britain on Wednesday moved to loosen the grip of Apple and Google in smartphones by designating them as having “strategic market status”, giving it the power to demand specific changes to boost competition.

The Competition and Markets Authority said Apple iOS and Google’s Android platforms were used by millions of businesses and consumers, but rules such as restrictions in their app stores may be “limiting innovation and competition”.

The regulator, which has been told by the government to boost economic growth, said it was joining the United States, the European Union, Japan and others in taking action against the two tech giants.

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Google, however, said the CMA’s next steps would show if it was “pro-competitive”, while Apple urged it not to follow the EU’s example of intervening, which it said had left users with weaker privacy.  

Nearly all smartphones in Britain run on either Apple’s iOS or Google’s Android operating systems, and their respective app stores and browsers have exclusive or leading positions on their platforms.

The CMA has previously said this dominance enables them to exert considerable influence over content, services and technological developments.

The regulator said its decision was not a finding of wrongdoing and did not introduce any immediate requirements, but it would now consider “proportionate, targeted interventions” to ensure the platforms were open to effective competition.

Google, which received the first ever SMS designation earlier this month for its search operations, said the decision was “disappointing, disproportionate and unwarranted”.

“The CMA’s next steps will be crucial if the UK’s digital markets regime is to meet its promise of being pro-growth and pro-innovation,” Google’s senior competition director Oliver Bethell said in a blog post.

Apple said it “worked tirelessly” to create the best products, services and user experience, and said Britain risked undermining that, potentially leading to weaker privacy and security, and delayed access to new features.

“We’ve seen the impact of regulation on Apple users in the EU, and we urge the UK not to follow the same path.”

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Tom Smith, competition lawyer at Geradin Partners and a former CMA director, said the CMA could now give app developers more freedom, enabling them to tell customers about cheaper deals.

“This is something that has already been adopted in the U.S., so it should not be a controversial measure,” he said.

Matthew Sinclair, the senior director of trade body CCIA, said, however, the “opaque” designation process would lead to huge uncertainty for companies innovating and investing in Britain.

“It is vital that the CMA takes a more careful approach when considering conduct requirements and responds to the clear steer from ministers to prioritise investment and growth,” he said.

(Reporting by Paul Sandle; Additional reporting by Sam Tabahriti, Editing by Kate Holton, Alexandra Hudson)