The UK Competition and Markets Authority (CMA) has taken a step toward loosening Apple and Google’s dominance over smartphones by labeling the two companies as having “strategic market status,” allowing it to impose orders for specific changes that will help foster more competition. 

The CMA stated that platforms, including Apple’s iOS and Google’s Android, were widely used by millions of businesses and consumers. Still, it noted, rules such as the ones employed in their app stores might be “limiting innovation and competition”.

According to the regulator, it found that the firms’ mobile platforms, which include operating systems and browsers on both smartphones and tablets, held a position of “strategic significance” in the market, with most UK mobile device holders being either Apple or Android users.

The CMA, tasked by the government to stimulate economic growth, stated that it was following the lead of the United States, certain European countries, and Japan in targeting the two tech giants.

Apple and Google push back as UK regulator weighs tougher competition rules

Google, however, remarked that the CMA’s upcoming actions would reveal whether it was truly fostering competition. At the same time, Apple cautioned against following the EU’s interventionist approach, which it claimed had weakened user privacy.

In the UK, nearly all smartphones operate on either Apple’s iOS or Google’s Android systems, with their app stores and browsers holding dominant or exclusive positions on their respective platforms. The CMA has previously noted that this dominance allows the two tech giants to wield significant control over digital content, services, and innovation.

The regulator clarified that its decision did not imply any wrongdoing or impose immediate obligations but signaled its intent to consider “proportionate, targeted interventions” to enhance competition.

Google, which earlier this month became the first company to receive a Strategic Market Status (SMS) designation for its search business, described the move as “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 stated that it “worked tirelessly” to create the best products, services, and user experience, and noted that Britain risked undermining this effort, potentially leading to weaker privacy and security, as well as 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.”

Just recently, the iPhone maker went to court in Luxembourg to launch a legal challenge against the EU’s Digital Markets Act, a forerunner to the UK’s new tech competition rules that came into force in January.

The tech firm is opposed to the DMA’s changes to its App Store and how iPhones interact with wireless accessories from other manufacturers, such as headphones.

The investigations arrived at a challenging time for the CMA, which is trying to implement the new digital markets laws without being perceived as overly hostile to business.

Experts urge CMA to balance fair competition with investment-friendly policies

According to Tom Smith, a competition lawyer at Geradin Partners and a former CMA director, the CMA could now allow app developers to operate with greater ease, enabling them to inform customers about cheaper deals.

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

Matthew Sinclair, the senior director of trade body CCIA, noted, however, that the “opaque” designation process would cause significant uncertainty for firms innovating and investing in the UK.

Sinclair continued to emphasize that it is essential for the CMA to adopt a conservative approach when considering conduct requirements and respond to the clear steer from ministers to promote investment and growth.

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