CMA closes investigations into Apple and Google in favour of new DMCC regime
On 21 August 2024 the CMA announced that it had closed its antitrust cases into Apple’s App Store and Google’s Play Store. The cases concerned both Apple’s and Google’s terms of service for app developers and whether they restrict competition. The CMA’s case closure statements said the cases were no longer administrative priorities and referred to its upcoming powers under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act) as providing new tools to regulate digital markets.
The CMA referred to its Prioritisation Principles in its closure statements, which sets out factors the CMA considers in deciding which cases it brings (or in this case, continues). The CMA had regard to the fact that it can consider the different tools that are available to deliver its work and stated that the new powers introduced in the DMCC Act may provide more efficient and effective tools to look into the conduct investigated in these cases.
Background
The CMA opened its investigation into Apple’s App Store in March 2021, and into Google’s Play Store in June 2022. Both investigations were Chapter II investigations into the distribution of apps by the tech companies. Specifically, the CMA investigated whether terms requiring app developers to use Apple’s and Google Play’s own payment systems for in-app purchases limited competition for payment solutions on the app stores and potentially led to less consumer choice, and higher prices.
In April 2023 Google offered the CMA commitments to resolve the investigation, but following a consultation process, these were rejected by the CMA at the same time as closing the case.
The CMA made no findings as to whether there was an infringement of Chapter II when closing both cases.
DMCC Act
Under the DMCC Act the CMA has new powers to designate firms as having ‘Strategic Market Status’ in relation to digital activities. This is a forward-looking prospective regime which allows the CMA to issue fines and mandate actions that firms must take to address or prevent problems which it identifies e.g. requiring firms to trade on fairer terms or provide users with effective choice.
The Government has announced that it aims to bring into force Part 1 of the Act, which establishes the pro-competitive regime and tools for the CMA to designate firms as having Strategic Market Status, in December 2024 or January 2025.
The CMA has said that it expects to launch 3-4 investigations in the first year of the new regime’s operation. In a speech at The Times Tech Summit on 1 October 2024, the CMA’s CEO Sarah Cardell stated that digital advertising, search and mobile ecosystems will be high priorities for the CMA under the DMCC regime.
Therefore, while the CMA has not taken any decisions regarding which firms or digital activities it will investigate, it appears that the CMA has put down a marker that the conduct investigated in the Apple and Google cases will be looked at through the new DMCC lens.
Comment
The CMA’s new DMCC powers, alongside the EU’s already operational Digital Markets Act, provide a new frontier for digital enforcement. The CMA’s closure of these cases provides an insight into the way the CMA is seeking to apply its tools and heralds the opening of the DMU regime.
In the meantime, as regulators implement their new powers, private enforcement actions will continue in parallel to seek compensation for affected market participants, and it appears that private enforcement will continue to fulfil its complementary role, even as public enforcement enters into a new era.
* Hausfeld’s London office represents Dr Kent and Ms Coll in their claims for damages relating to Apple’s App Store and Google’s Play Store (respectively) currently before the Competition Appeal Tribunal.