The United Kingdom is intensifying its regulatory oversight of major technology firms, with Apple and Google at the forefront. The Competition and Markets Authority (CMA) has proposed designating these companies as possessing strategic market status (SMS) under the newly enacted Digital Markets, Competition, and Consumers Act (DMCC). This designation aims to address and mitigate anti-competitive behaviors within the digital marketplace.
Understanding Strategic Market Status
The SMS designation is reserved for companies that exhibit substantial and entrenched market power, coupled with a position of strategic significance in a specific digital activity within the UK. For Apple and Google, this pertains to their dominance in mobile operating systems, app stores, and web browsers. The CMA’s investigations have revealed that nearly all mobile devices sold in the UK come pre-installed with either Apple’s iOS or Google’s Android operating systems. Additionally, their respective app stores and browsers hold exclusive or leading positions on these platforms, overshadowing alternative products and services. This dominance has raised concerns about potential anti-competitive practices that could stifle innovation and limit consumer choice.
Implications of the DMCC
The DMCC, which received royal assent on 24 May 2024, empowers the CMA to impose specific conduct requirements on firms designated with SMS. These requirements are designed to foster fair competition and protect consumer interests. Key provisions include:
– Prohibition of Self-Preferencing: Companies are barred from favoring their own services or products over those of competitors.
– Ban on Anti-Steering Practices: Firms cannot prevent developers from directing consumers to alternative payment methods or platforms outside their proprietary ecosystems.
– Enhanced Interoperability and Data Portability: Companies must ensure that their platforms are compatible with third-party services and that consumers can easily transfer their data between different services.
Non-compliance with these regulations can result in substantial penalties, including fines up to 10% of a company’s global revenue. For tech giants like Apple and Google, this could translate into billions of dollars.
Industry Reactions
Both Apple and Google have expressed reservations about the proposed regulations. Apple has raised concerns that the new rules could compromise user privacy and security, potentially hindering innovation. Google, on the other hand, has described the CMA’s move as disappointing and unwarranted, emphasizing the need for evidence-based and proportionate regulation.
The CMA is currently soliciting feedback from stakeholders and aims to finalize the SMS designations by October 22, 2025. This period allows for industry input and potential adjustments to the proposed regulations.
Broader Context
The UK’s regulatory approach mirrors similar initiatives in other jurisdictions. The European Union’s Digital Markets Act (DMA), which took effect in early 2025, targets major tech companies classified as gatekeepers, including Apple and Google. The DMA aims to make digital markets fairer and more contestable by imposing obligations such as allowing users to download apps from third-party sources and ensuring interoperability between messaging systems.
In the United States, both Apple and Google have faced antitrust scrutiny. Google is currently involved in a trial over its online ad management tools, while Apple has been ordered to repay €13 billion to Dublin for undue tax advantages. These actions reflect a global trend towards increased regulation of digital monopolies.
Potential Outcomes
If the SMS designations are confirmed, Apple and Google may be required to implement significant changes to their business practices in the UK. This could include reducing the fees charged on app transactions, allowing alternative app distribution methods, and improving interoperability between their services and third-party apps. Developers might also gain the ability to direct users to pay for services outside the app stores, potentially reducing the companies’ control over in-app purchases.
The CMA’s actions underscore a growing commitment to ensuring that digital markets operate fairly and competitively. By addressing the dominance of major tech firms, the UK aims to foster an environment where innovation can thrive, and consumers have access to a broader range of choices.
Conclusion
The proposed designation of Apple and Google as having strategic market status marks a significant step in the UK’s efforts to regulate digital markets. While the tech giants have raised concerns about the potential impact on innovation and security, the CMA’s focus remains on promoting competition and protecting consumer interests. As the consultation period progresses, stakeholders from various sectors will have the opportunity to contribute to the shaping of these regulations, ensuring a balanced approach that considers both industry dynamics and consumer welfare.
