Apple-Google Browser Duopoly 'Anti-Innovation' - UK Competition Probe

Competition Concerns: Apple and Google's Mobile Browser Policies

An investigation conducted by the U.K.’s competition authority has determined that the policies of Apple and Google regarding their mobile browsers are potentially hindering innovation and impeding economic expansion.

Impact on Consumers and Businesses

Mobile browsers function as the primary access point for consumers to utilize the internet on their mobile devices. Consequently, they are crucial for businesses seeking to connect with their target audiences and deliver content and products.

The inquiry’s findings suggest that consumers may be deprived of novel functionalities when utilizing mobile browsers. Furthermore, businesses face restrictions in their capacity to engage with consumers through browser applications.

Apple's Policies Under Scrutiny

The majority of identified concerns are linked to Apple’s regulations governing the operation of mobile browsers on its devices.

Specifically, Apple’s requirement for other browsers on iOS to utilize its WebKit browser engine restricts their ability to distinguish themselves from Safari. This limitation prevents the offering of advanced features.

Competitive Disadvantages

Safari benefits from prioritized or earlier access to essential platform features compared to competing browsers. This disparity is believed to stifle competition, particularly in areas like privacy enhancements.

Development of PWAs (progressive web apps) on iOS is also being hampered by these policies.

Restrictions on In-Browser Functionality

Limitations on in-browsing capabilities further restrict rival browsers’ ability to effectively serve users who navigate from app links to external websites.

Certain aspects of the user interface design also contribute to these competitive challenges.

Google's Revenue Sharing Arrangements

The investigation also focuses on the financial arrangements between Google and Apple. Google reportedly provides Apple with a substantial portion of the revenue generated from search advertisements on Safari and Chrome on iOS.

Reduced Incentives to Compete

The inquiry group found that both Apple and Google profit significantly when rival mobile browsers are used for web searches on Google via iOS. This creates a diminished incentive for them to actively compete.

The scale of the revenue sharing is considered so substantial that it significantly weakens the financial motivation to foster competition.

Final Report Details

These conclusions are detailed in a 611-page final decision report released on Wednesday, outlining the comprehensive findings of the investigation.

Continued Absence of Regulatory Action

Despite a comprehensive set of unfavorable findings – and despite longstanding U.K. competition anxieties regarding the dominance of Apple and Google in the mobile sector – concrete enforcement measures remain absent. The report suggests postponing action until newly established abuse control authorities become operational.

These authorities will be activated should an ongoing investigation into the two technology companies, initiated in January, substantiate their qualification under enhanced antitrust regulations held by the Competition and Markets Authority (CMA). These regulations were implemented following a significant U.K. overhaul of competition legislation aimed at digital behemoths, effective this January. Consequently, resolutions to the identified anti-competitive practices remain uncertain.

The report discourages addressing the competition issues through conventional market investigation tools, citing “a number of significant risks to the effectiveness of such measures.”

The investigation previously included cloud gaming, but this aspect was removed last November following alterations made by Apple. The regulator believed these changes were likely to mitigate competition concerns.

The report, compiled by an independent inquiry group established by the CMA when the market investigation into Apple and Google’s mobile control began in November 2022, echoes similar preliminary findings from last autumn. However, the inquiry group now expresses diminished concern regarding certain choice screen issues previously highlighted.

Specifically, an Apple update in December, modifying how iOS users designate their preferred browser, addressed prior concerns on that platform. Furthermore, Google furnished the inquiry group with “new evidence concerning its utilization of prompts to incentivize users to select Chrome as their default browser on Android,” which also alleviated its concerns.

Concurrently, the inquiry group maintained objections to certain screen design elements, asserting they potentially impede users' ability to transition to alternative mobile browsers compared to Apple’s Safari and Google’s Chrome.

Potential Future Solutions

The concluding report outlines several possible solutions – referred to as “appropriate interventions” – to address the competition issues within the mobile browser market, detailed comprehensively in Appendix D.

These proposed solutions encompass mandating Apple to permit the utilization of alternative browser engines. An interoperability requirement is also suggested, ensuring equivalent access to iOS functionalities for competing browsers. Furthermore, a prohibition of the revenue sharing arrangement involving Chrome is considered.

Regulation could also extend to the manner in which Google presents browser selection screens to users. This includes controlling the frequency of prompts regarding default browser preferences.

Although these remedies are not currently being implemented as part of the CMA’s market investigation, they may indicate the direction the regulator could take in enforcing rules on the mobile duopoly held by Apple and Google.

This is contingent upon the Digital Markets Unit’s investigation determining that these companies possess what is known as Strategic Market Status (SMS). Achieving SMS would subject them to a specific abuse control framework and potential tailored interventions. The SMS investigations concerning Apple and Google are anticipated to be finalized later this year.

Margot Daly, chair of the CMA’s independent inquiry group, issued the following statement:

Requests for comment were directed to both Apple and Google regarding the inquiry group’s final report.

Apple provided this statement:

“Apple is dedicated to fostering vibrant and competitive markets that encourage innovation. We encounter competition across all sectors and regions where we operate, and user trust remains our primary concern. We have reservations about this report and believe the suggested remedies could compromise privacy, security, and the overall user experience. We will continue to collaborate with the CMA to effectively address their concerns.”

Google responded with the following remarks:

“Android’s open nature has facilitated expanded choice, reduced costs, and broadened access to smartphones and applications. We are committed to open platforms that empower developers to build thriving businesses, and we will work with the CMA to establish a pro-innovation, evidence-based, and predictable regulatory framework that supports UK growth.”

This article has been updated to include Google’s statement.