Apple and Google duopoly ‘hurting competition in phone and tablet market’

Apple and Google have created a duopoly over mobile devices and are limiting competition and choice because of their “vice-like grip” on the market, the UK’s competition watchdog has said.

An interim report published by the Competition and Markets Authority (CMA) said it had concerns over Apple’s iOS and Google’s Android operating systems, their domination of the phone and tablet market and therefore the ability to control the apps and services users can access.

According to the CMA, in 2020 more than half of all smartphones used in the UK were iPhones, with the rest all using a version of Android.

It said this was a concern because Apple does not allow other app stores on its devices and pre-installs its own web browser while Android comes with some Google services pre-installed, meaning consumers could be given less meaningful choice.

The report’s findings mark the first stage of a CMA investigation into mobile ecosystems, with a final report and recommendations due next summer.

“Apple and Google have developed a vice-like grip over how we use mobile phones and we’re concerned that it’s causing millions of people across the UK to lose out,” CMA chief executive Andrea Coscelli said.

“Most people know that Apple and Google are the main players when it comes to choosing a phone.

“But it can be easy to forget that they set all the rules too – from determining which apps are available on their app stores, to making it difficult for us to switch to alternative browsers on our phones. This control can limit innovation and choice, and lead to higher prices – none of which is good news for users.”

The CMA’s interim report also suggests a range of potential actions which could be taken against the two companies to address the competition issues raised.

It includes forcing the firms to make it easier for users to switch between iOS and Android phones when replacing a device, or making it easier to install apps from sources other than the firms’ own app stores.

In addition, it suggests enabling apps to be able to offer alternative in-app payment options, rather than being tied to Apple and Google’s payment systems, and boosting choice around web browsers.

It said the new Digital Markets Unit – which sits within the CMA as a digital regulator with the aim of boosting competition – could oversee any potential action taken.

“Any intervention must tackle the firms’ substantial market power across the key areas of operating systems, app stores and browsers,” Mr Coscelli said.

“We think that the best way to do this is through the Digital Markets Unit when it receives powers from government.”

In response, both Apple and Google said they were committed to promoting competition.

“Apple believes in thriving and dynamic markets where innovation can flourish,” Apple said in a statement.

“We face intense competition in every segment in which we operate, and our North Star is always the trust of our users. We will continue to create new opportunities for developers while protecting our users’ privacy and security.”

“Our rules and guidelines are constantly evolving, and we have made many recent changes that benefit developers and consumers alike. We will continue to engage constructively with the UK Competition and Markets Authority as their work on this study progresses.”

A Google spokesperson said Android “provides people with more choice than any other mobile platform in deciding which apps and app stores they use”.

“The Android app ecosystem also supports nearly a quarter of a million jobs across thousands of app developer and phone maker businesses in the UK,” the company said.

“At Google we regularly review how we can best support these businesses – for example – as a result of recent changes, 99% of developers qualify for a service fee of 15% or less.

“We’re committed to building thriving, open platforms that empower consumers and help developers succeed.”

The Government has also responded to the report, with tech and digital economy minister Chris Philp saying ministers were determined to boost digital competition.

“We want the UK to remain a place where all tech firms can thrive and this study underlines the importance of ensuring mobile app stores are fair and competitive,” he said.

“Our new pro-competition regime will level the playing field between tech giants and smaller businesses and prevent abuses that could curtail growth and innovation. We are grateful for the CMA’s work to date and look forward to the final recommendations.”