CMA ramps up use of UK digital competition regime with new investigations

The CMA recently announced strategic market status (SMS) designation investigations in a second area of digital activity, namely mobile ecosystems, under the  Digital Markets, Competition and Consumers Act 2024 (DMCC Act), little more than a week after launching its first ever SMS designation investigation into Google’s general search and search advertising digital activities.

The DMCC Act came into force on 1 January this year and, amongst other important changes, created the UK’s new digital competition regime which is the basis for the CMA’s new designation procedures and also the UK equivalent of the EU’s Digital Markets Act (DMA).

The two new parallel SMS designation investigations will assess Apple’s and Google’s position in relation to their mobile operating systems, app stores and browsers – together referred to as “mobile ecosystems” – and whether either firm has SMS in these areas. The CMA will explore the impact on people who use mobile devices and the thousands of businesses developing innovative services or content such as apps for these devices.  The goal is to ensure that markets work well for all businesses, large and small, to create maximum opportunities for growth, investment and innovation across the UK economy.

The CMA has stated that virtually all mobile devices sold in the UK come pre-installed with either Apple’s iOS or Google’s Android; and that Apple’s and Google’s own app stores and browsers have either exclusive or leading positions on their platforms compared to alternative products and services, enabling each tech firm “to exert considerable influence over much of the content, services and technological development provided on a mobile device”. As part of its SMS investigation the CMA will consider how this dynamic affects competition and consumer choice.

If the CMA finds that Apple or Google have SMS in relation to their mobile ecosystem digital activities, it can take various steps to promote competition. These could include imposing conduct requirements or proposing ‘pro-competition interventions’ to help ensure positive outcomes for UK consumers and businesses. The CMA will consider possible conduct requirements at the same time as it carries out the SMS designation investigations. According to the CMA “potential conduct requirements could include, for example, requiring Apple or Google to open up access to key functionality needed by other apps to operate on mobile devices; or making it possible for users to download apps and pay for in-app content more easily outside of Apple’s and Google’s own app stores.”

In both SMS investigations, the CMA is inviting public comments until 22 February as part of the initial stage of the procedure. The authority will also gather evidence from both Apple and Google before reaching a SMS designation decision, expected by the end of October this year.

Further SMS designation investigations are expected. Most recently, the CMA’s independent inquiry group in the ongoing cloud services market investigation has provisionally recommended that the CMA should use its new digital markets competition powers under the DMCC Act to consider whether to designate Amazon Web Services (AWS) and Microsoft with SMS in relation to their respective digital activities in cloud services, rather than imposing direct remedies under the Enterprise Act 2002. In the inquiry group’s provisional view, SMS designation could enable the CMA to implement “measures which might encourage appropriate technical standardisation, reduce data transfer charges incurred in switching and multi cloud and/or ensure fair licensing of software.”

The recommendations for SMS designation seek to address the inquiry group’s provisional findings that competition in UK cloud services markets is not working as well as it could be and this may be adversely impacting costs, choice, innovation and service quality for businesses and organisations in the UK. The CMA’s cloud services market investigation was launched under the Enterprise Act 2002 in October 2023, after Ofcom’s market study identified competition concerns in the sector. The CMA is publicly consulting on its provisional findings until 18 February and its final conclusions and recommendations are due by 4 August.

These developments also closely align with the CMA priorities set out in the authority’s draft annual plan for 2025-26.