The UK’s competition regulator should be strengthened to better combat tech giants Apple and Google and their market dominance, a think tank has said.
The Institute for Public Policy Research (IPPR) said strong competition laws would help increase innovation and help grow the economy.
A new report from the think tank said that despite growing political criticism and what it called intense lobbying from US tech giants, the Government should give more powers to the Competition and Markets Authority (CMA) to challenge the dominance of Apple and Google.
Some officials from within the administration of US President Donald Trump have previously criticised Europe and the UK over their regulation of US tech giants, particularly in the areas of competition and online safety, arguing US businesses are being unfairly targeted.
But in its report, the IPPR said it had found that the two firms’ app stores – which are the subjects of ongoing CMA investigations – may be stifling UK businesses from growing, because of their control over these app stores and the payment systems built into them, which in the UK are tightly controlled by the two firms.
Both firms charge a commission of between 15% and 30% for in-app purchases, and the IPPR said the companies were likely to generate between £1.5 billion and £2.4 billion in revenue from their app stores in the UK this year as a result.
In contrast, it claimed that in a more competitive market and with a lower commission rate of around 12%, up to £1.4 billion of revenue would shift from the two tech giants to app developers – money the IPPR argues could help UK-based developers with innovation, job creation and growth.
New competition laws in the EU have already begun forcing Apple and Google to open up their app store platforms more, including by allowing third-party app stores and allowing developers to direct consumers to alternative payment options.
Dr George Dibb, associate director for economic policy at IPPR, said: “Enforcing the UK’s competition rules isn’t anti-business – it’s a pro-business, pro-worker, pro-growth agenda.
“If we weaken those rules, we’re letting dominant firms and tech giants hold back innovation and investment. That’s money being extracted from British businesses and workers, and funnelled to monopolistic firms, often overseas.
“In the US, there’s a bipartisan consensus between Trump and Biden on confronting dominant firms through competition policy, with both taking legal action against Google and Facebook.
“The UK Government must back the CMA to act more decisively – to ensure our economy supports exciting new enterprises, not just entrenched incumbents.”
The IPPR said the CMA should be given the ability to speed up interventions against the biggest threats to consumers by focusing on big tech issues, and fast-track consumer harm cases to deliver quicker decisions on those issues.
It also called for the CMA to adopt a formal mandate on promoting growth and specifically targeting business practices that suppress wages or undermine smaller firms and their growth.
A CMA spokesperson said: “The digital markets competition regime, which came into force earlier this year, unlocks our ability to tackle unfair practices online, promoting effective competition and delivering the growth this country needs.
“The CMA is currently investigating Apple’s and Google’s mobile ecosystems – which includes their app store practices – with provisional outcomes expected in the summer.”
A Government spokesperson said: “This Government is determined to strengthen competition and protect consumers.
“That’s why we have introduced a new steer to the CMA and granted them new powers via recent legislation to promote more competitive digital markets to ensure consumers and businesses are treated fairly.”
A Google spokesperson said the report “fundamentally misrepresents” Google’s services.
“Android offers a choice of app stores for developers and has democratised access to smartphones, generating over £9.9 billion in revenue for British developers and supporting over 450,000 UK jobs,” the spokesperson said.
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