The UK’s Competition And Markets Authority has closed its investigations into Apple and Google’s App Store rules. Those investigations had a focus on the rules around in-app payments that have been widely criticised by Spotify and other app developers, and which have been subject to litigation and regulator interventions in multiple other countries.
While the existing CMA investigations have been closed, it seems likely that new ones will be launched in the near future under the recently passed Digital Markets, Competition And Consumers Act, which increases the power of the regulator in the context of tech companies abusing their market dominance. Meanwhile, the CMA has confirmed that it has rejected proposals made by Google for addressing concerns raised during the now closed investigations.
In a statement, the regulator says that, with the passing of the DMCCA, its existing investigations into Google and Apple are now in conflict with its “administrative priorities”. By instigating new investigations under the DMCCA, it adds, “the CMA will be able to use its new powers to consider the range of issues raised by parties more holistically”.
Once the DMCCA comes properly into force, “we’ll be able to consider applying those new powers to concerns we have already identified through our existing work", says Will Hayter, Executive Director For Digital Markets at the CMA. “It’s critical that tech businesses in the UK, including app developers, can have access to a fair and competitive app ecosystem, helping to grow the sector, boost investment and result in better outcomes for UK consumers”.
“These are all factors we are considering before launching our first investigations under the new regime”, he adds. What those first investigations will focus on is still to be confirmed. Indeed, the obligations in the DMCCA only apply to tech companies that are deemed to have ‘strategic market status’, and those companies are yet to be identified. However, it seems likely Apple and Google will fall under the purview of the new regulations, including in the smartphone market.
Spotify has long been critical of Apple’s rules that force apps selling access to digital content to take in-app payments via Apple’s commission-charging transactions system, and which prohibit the sign-posting of alternative payment options outside of an app.
In Europe, Spotify formally complained to the European Union, which concluded earlier this year that the Apple rule regarding sign-posting alternative payment options breached EU competition law. It fined Apple €1.8 billion and ordered that rule to be changed.
Although the EU saw its investigation into Apple through to conclusion, it too was arguably usurped by new regulations, with the EU’s Digital Markets Act more clearly setting out the obligations of tech giants operating in Europe.
Apple has changed its rules around sign-posting, although Spotify reckons it is still not compliant with EU law. Even though Spotify has begrudgingly signed up to Apple's amended terms for music apps in the EU so that it can start promoting subscription packages within its iOS app in European markets.
Spotify was previously critical of Google too over its equivalent app rules on Android devices. However, a compromise was reached between Spotify and Google. Other app developers have also been offered better terms by Google, although not quite as favourable as the terms secured by Spotify.
Both Google and Apple still want to charge commissions on purchases that begin within an app, even if the transaction occurs on another platform. However, it emerged in a court case in the US last year, Spotify managed to negotiate a 0% commission.
When Google shared its less preferential amended terms for other app developers with the CMA, it found that those developers were not so happy with the compromise. The CMA explains in its statement, “Having consulted app developers, and after reviewing their feedback as well as the available evidence, the CMA is not satisfied that Google’s proposed commitments address its competition concerns effectively”.
“Feedback from app developers suggested Google’s proposals to allow app developers to use alternative payment methods for in-app payments did not go far enough and they would in practice remain tied to the Google payment system”, the CMA adds. “In particular, app developers referred to the level of commission they would still be paying to Google, and to the proposed ‘pop-up screens’ that might put users off completing a transaction”.
While Spotify has reached a favourable compromise with Google, it remains critical of Apple, and will almost certainly be lobbying the UK government to encourage the CMA to make Apple’s App Store rules a priority when enforcing the new DMCCA.
