What is Strategic Market Status and why are Apple and Google being investigated in UK?

The UK’s Competition and Markets Authority (CMA) has launched parallel investigations into the mobile ecosystems of Apple and Google, scrutinising their dominance in operating systems, app stores, and browsers. These ecosystems play a crucial role in how UK consumers and businesses interact with the digital world.

With mobile devices being an integral part of daily life, the CMA aims to assess whether these two tech giants hold Strategic Market Status (SMS) and, if so, whether regulatory interventions are required to foster competition and innovation. The investigations come as part of the Digital Markets, Competition and Consumers Act 2024, which empowers the CMA to address market imbalances.

Why Are Apple and Google Under Investigation?

Apple’s iOS and Google’s Android operating systems dominate the UK’s mobile market, with nearly all smartphones and tablets pre-installed with one of these platforms. These ecosystems are deeply entrenched, offering exclusive or leading positions for their respective app stores and browsers. The CMA is exploring concerns about:

• Market dominance and barriers to competition: Apple and Google may use their entrenched positions to block or disadvantage competitors offering alternative products or services.
• Leveraging market power: The CMA is investigating whether these firms use their control over app distribution, operating systems, or browsers to favour their own services, potentially at the expense of competitors.
• Exploitative practices: Developers have raised concerns about unfair terms imposed by Apple’s App Store and Google Play Store, including high commission fees and restrictive payment policies.

The investigation will also address concerns about “choice architecture,” where pre-installed apps and default settings make it difficult for users to explore alternatives.

How Do Mobile Ecosystems Impact UK Consumers and Businesses?

Mobile devices are ubiquitous in the UK, with 94% of those aged 16 and older—about 56 million consumers—owning a smartphone. These devices are more than just tools for communication; they are gateways to online shopping, entertainment, and innovative services.

Businesses also rely heavily on mobile platforms to interact with customers, process payments, and manage operations. The UK’s app development industry, worth approximately £28 billion, involves nearly 15,000 businesses. Many companies are innovating with mobile technologies, such as digital wallets, AI-driven applications, and connected devices like smartwatches.

The CMA’s investigation is crucial because it could determine whether businesses and consumers are being unfairly restricted by Apple and Google’s practices. Greater competition could unlock new opportunities for app developers, enable more affordable pricing for users, and drive technological advancements.

What Is Strategic Market Status, and Why Does It Matter?

Under the Digital Markets, Competition and Consumers Act 2024, firms with Strategic Market Status are identified as having substantial and entrenched market power within a specific digital activity linked to the UK. To qualify for SMS designation, a firm must meet the following criteria:

• Demonstrate entrenched market power.
• Hold a position of strategic significance in its sector.
• Have a global turnover exceeding £25 billion or UK turnover above £1 billion.

If the CMA designates Apple and Google with SMS, it could impose conduct requirements or introduce pro-competition measures to prevent exploitative or anti-competitive behaviour. Potential interventions might include opening access to core functionalities or allowing developers to offer apps outside the firms’ ecosystems.

What Are the Potential Outcomes of the CMA Investigation?

The CMA’s findings, expected by 22 October 2025, could reshape the mobile ecosystem landscape in the UK. If SMS is confirmed for either company, the CMA could enforce measures to promote competition, including:

• Requiring fair access to APIs and functionalities for third-party developers.
• Allowing alternative payment options for in-app purchases.
• Preventing pre-installed apps from having undue advantages over rivals.

Effective competition within mobile ecosystems could lead to significant consumer benefits, including lower costs, greater choice, and enhanced innovation. Businesses could also gain new opportunities to develop cutting-edge technologies without the barriers currently posed by the dominance of Apple and Google.

How Does This Fit Into the CMA’s Broader Agenda?

The investigation into mobile ecosystems is part of the CMA’s wider efforts to ensure fair competition in digital markets. It follows the authority’s first SMS investigation into Search and is separate from the ongoing Market Investigation into Mobile Browsers and Cloud Gaming. A provisional report from this inquiry suggested that Apple’s and Google’s practices are stifling competition in the browser market.

By addressing concerns in mobile ecosystems, the CMA aims to drive positive change across the UK’s digital economy, fostering an environment where innovation and competition thrive.

CMA’s Commitment to Transparency and Stakeholder Engagement

The CMA has pledged a transparent and proportionate approach to its investigations. It will gather evidence from Apple, Google, and other stakeholders, including app developers, device manufacturers, and consumer groups. Interested parties are invited to submit comments by 12 February 2025, contributing to a robust and well-rounded investigation.

What Does This Mean for the Future of Mobile Ecosystems?

Sarah Cardell, Chief Executive of the CMA, highlighted the importance of competition in mobile ecosystems:

“The operating systems, apps, and browsers installed on our phones act as gateways into the digital world. More competitive ecosystems could foster innovation and growth, benefiting both businesses and consumers in the UK.”

As mobile technology continues to evolve, the CMA’s investigations could play a pivotal role in shaping the future of mobile ecosystems, ensuring they remain fair, innovative, and accessible to all stakeholders.