Explained

Why is the CMA decision relevant to video game companies?

The CMA’s decision and its potential consequences are set to have a significant impact on the mobile games sector, where recent reports show that up to 87% of games rely on Google and Apple for the majority of their revenue. This dependency obligates developers to adhere to the policies and technical requirements established by these two major platforms in order to reach customers and, ultimately, monetise their products. In this context, the CMA's ruling could foster a more competitive environment for developers. The most notable changes would likely include “steering” provisions allowing app developers to have closer engagement with their customers and the benefit of more transparent and predictable app review processes.

Was the decision expected?

Apple and Google’s SMS designation had been on the cards for a long time. The decision to launch the full investigation was preceded by the CMA's extensive market study and antitrust investigations in this sector, which highlighted the limited competition within the mobile ecosystem and underlined the suitability of the new regime to better address potential anti-competitive conduct.

Furthermore, the UK competition authority published its proposal to designate both companies with SMS status back in July, alongside detailed roadmaps for each platform. These roadmaps set out the possible measures, known as Conduct Requirements (CRs), that the CMA will implement to enhance competition in these markets.

At the international level, this designation aligns closely with the decisions adopted by other competition authorities through the enforcement of similar digital markets regulations and antitrust cases. In 2023, the European Commission designated Apple and Google as “gatekeepers” in core platform services (including app stores) under the Digital Markets Act (DMA). Last April, the Commission fined Apple €500 million for failing to comply with the DMA’s anti-steering provisions, preventing app developers from informing and allowing users to make purchases outside of the App Store. (Check our explanation on this case). More recently, the Federal Court of Australia found that Apple and Google’s app store policies were anticompetitive by restricting developers ‘ use of alternative app distribution platforms and in-app payment methods on Apple or Android mobile devices since 2017.

In this regard, the CMA’s decision mentions that there are a number of jurisdictions around the world that are adopting similar actions to support business and consumers dependent on mobile platforms.

How does the CMA aim to improve competition in the app distribution market?

The CMA clarified that the company’s SMS designation does not, in itself, introduce immediate requirements for designated companies. However, it enables the CMA to consider the interventions that would contribute to level the playing field.

While full consultations on the final wording of the possible interventions will be published anytime soon, the roadmaps published in July outlined the immediate, high-priority actions that the CMA is now likely to implement. These include mandatory requirements for both companies to provide fair, objective, and transparent app review processes, including clear reasons for rejection or delay, and public transparency on app ranking methodologies. Furthermore, Apple and Google would be required to allow developers to clearly “steer” users outside of the app store (e.g., to the developer's own website) to complete subscriptions or purchases. These measures are critical to promote competition in payment processing and potentially lower app distribution costs.