Monopoly chiefs investigate Apple and Google over ‘stranglehold’ on the phone market
- Apple made a global profit of £80 billion in 2021, while Google made £57 billion
- Watchdog worries tech giants are taking advantage of their dominance
- Such gains ‘above what would be expected in a highly competitive market’
- Apple and Google have found an effective duopoly on mobile ecosystems, study finds
Watchdogs prepare to investigate Apple and Google’s “stranglehold” on cell phone, browser and app usage.
The Competition and Markets Authority has expressed concern that the tech giants are abusing their dominance to make billions from consumers, while stifle competition and innovation.
Significantly, it plans to open a full market investigation into the companies, which could force them to change their business practices without having to wait for new laws.
The CMA pointed out that Apple made a global profit of £80 billion in 2021, while the figure for Google was £57 billion.
It said: “While high profits are not necessarily a concern in themselves, these above-competitive returns are consistently above what would be expected in a highly competitive market.”
The watchdog said a year-long investigation found that Apple and Google have an effective duopoly on mobile ecosystems, allowing them to strangle these markets, including operating systems, app stores and web browsers on mobile devices.
The Competition and Markets Authority has expressed concern that the tech giants are abusing their dominance to make billions from consumers while stifling competition and innovation
Apple and Google (parent company Alphabet) are two tech giants accused of exploiting their market dominance in mobile apps through their software platforms iOS and Android respectively to make “supra-competitive” profits.
CMA chief executive Andrea Coscelli said: “When it comes to how people use cell phones, Apple and Google hold all the cards.
“As good as many of their services and products are, their strong hold on mobile ecosystems allows them to lock out competitors, hold back the UK tech sector and limit choice. We all rely on browsers to use the internet on our phones, and the engines that make them work have a huge impact on what we can see and do.
“The choice in this space is severely limited and that has real consequences: innovation is prevented and competition from web apps is reduced. We must give innovative tech companies, many of which are ambitious start-ups, a fair chance to compete.’
The government has announced plans to create a digital markets unit to monitor tech companies. It would be given powers to crack down on predatory practices and fine companies up to 10 percent of their global revenue.
But given concerns about delays in setting up this new regime, the CMA is using existing competition laws to challenge Apple and Google. It also has Facebook, Instagram and Amazon in its sights. dr. Coscelli added: ‘We have always been clear that we will maximize the use of our current tools while we wait for legislation for the new digital regime.’
The CMA pointed out that Apple made a global profit of £80 billion in 2021, while the figure for Google was £57 billion
The CMA said 97 percent of all mobile browsing is done through Apple’s Safari or Google’s Android Chrome browser engines. Apple actively bans alternatives to Safari. The CMA is concerned that Apple has blocked access to cloud gaming services. These provide mobile access to high-quality games that can be streamed rather than downloaded separately.
As a result, iPhone and iPad users are forced to download game apps from the Apple Store, bringing huge profits. At the same time, the CMA is launching a competition law investigation into Google’s rules on apps accessing listings in the Google Play Store. An investigation into the terms of Apple’s App Store is already underway.
The Daily Mail and MailOnline are suing Google in the US for alleged anti-competitive behavior. This has to do with the company’s ability to exploit its dominance over online advertising and potentially manipulate news search results in a way that penalizes online publishers.
Apple said it respectfully disagrees with some of the CMA’s conclusions that “weaken our investments in innovation, privacy and user performance — all of which contribute to why users love iPhone and iPad.”
It added: ‘We believe in thriving and competitive markets where innovation can flourish. Through the Apple ecosystem, we’ve created a safe and trusted experience that users love and a great business opportunity for developers.”
Google said, “Android phones offer people and businesses more choice than any other mobile platform. Google Play has been the launching point for millions of apps and has helped developers build global businesses that support a quarter of a million jobs in the UK.
“We will continue to work constructively with the CMA to explain how our approach promotes competition and choice, while ensuring that consumer privacy and safety are always protected.”