New Challenges for the UK’s Digital Markets, Competition and Consumers Act

Megan Kirkwood is a 2025 Tech Policy Press reporting fellow.

As promised, the UK’s Competition and Markets Authority (CMA) released details of its second investigation under its new ex-ante law, the Digital Markets, Competition, and Consumers Act (DMCCA). Earlier in January, the CMA explained the timeline for the new regime, stating that it would conduct strategic market status (SMS) designation investigations connected to two “digital activities” in January, with a third investigation launched within the first six months of 2025.

On January 14, 2025, the CMA announced its first SMS investigation against Google in relation to its search and advertising business as one digital activity. On January 23, the CMA announced simultaneous SMS investigations against Google and Apple, targeting the companies’ “mobile ecosystems,” identified as a single digital activity. These investigations “will assess in parallel these firms’ position in their respective ‘mobile ecosystems’ which include the operating systems, app stores and browsers that operate on mobile devices.”

While the CMA already has an ongoingmarket investigation into Mobile Browsers and Cloud Gaming, the press release explicitly states this is separate from that investigation. However, they write that “the inquiry group leading that market investigation recommended that the CMA launch an SMS investigation after provisional findings suggested that Apple’s and Google’s business practices are holding back competition in the mobile browsers market.” According to the final guidance in the DMCCA, other competition cases, market studies, and investigations can inform the SMS designation.

The press release points to the areas of focus in the mobile ecosystems investigations, which include:

• "The extent of competition between and within Apple’s and Google’s mobile ecosystems. The CMA will assess how competition is working across Apple’s and Google’s mobile ecosystems and what barriers may be preventing other competitors from offering rival products and services on Apple’s and Google’s platforms."
• "Possible leveraging of Apple’s and Google’s market power into other activities. This will include investigating whether Apple or Google are using their position in operating systems, app distribution or browsers to favor their own apps and services, which often come pre-installed and prominently placed on iOS and Android devices."
• "Potential exploitative conduct. This will include investigating whether Apple or Google are requiring app developers to sign up to unfair terms and conditions as a condition of distributing their apps on Apple’s and Google’s app stores; and whether users may be presented with ‘choice architecture’ which makes it difficult to make active choices about which apps they are using on mobile devices.”

The CMA could target policies like Apple’s anti-steering provisions, which ban app developers from informing iOS users about alternative ways of subscribing or purchasing services outside of Apple’s ecosystem. Such provisions landed the company in regulatory hot water last year. Apple and Google could both be banned from pre-installing Apple’s Safari and Google’s Chrome on their respective operating systems or be made to show choice screens for users to select alternative defaults.

As I discussed in my last article looking at the first SMS designation investigation against Google, there are several tests that the CMA will need to prove to designate Apple and Google as having “substantial and entrenched market power” and a “position of strategic significance” with regards to their mobile ecosystems. This involves proving the firms meet the specified turnover conditions and that a “significant number” of UK users rely on these mobile ecosystems. The CMA will also need to do a forward-looking assessment of five years to assess the dynamics of the market if the firms were not to be designated, helping to prove the case that intervention is needed to improve competition.

The CMA will also need to prove either that the firms have achieved a position of significant size or scale, perhaps pointing to the duopoly the two firms hold in the UK, that a significant number of other firms use these mobile ecosystems, like app developers for example; that the firms can extend their market power to a range of other activities and enter new markets; or that Apple and Google’s positions allow them to substantially influence the ways that other firms conduct themselves in these mobile ecosystems. Lastly, the CMA will need to prove that Google and Apple do not face strong competitive constraints in the mobile ecosystem market, for example, because there is a lack of alternatives or there are significant switching costs to end users.

Potential Remedies

Once meeting these conditions, the CMA can impose conduct requirements, which the press release hints may include “requiring Apple or Google to open up access to key functionality needed by other apps to operate on mobile devices; or making it possible for users to download apps and pay for in-app content more easily outside of Apple’s and Google’s own app stores.” These potential remedies build on the the findings from the CMA’s 2022 mobile ecosystems market study, which suggested that the DMCCA mandate the removal of restrictions preventing users from using third-party app stores or browser engines; the allowance of third parties to access operating system functionalities; fair and transparent app review processes, for example, requirements not to share data between the app review and development parts of their businesses to prevent Sherlocking; and ensuring fairer app commission rates, which currently can be as high as 30%. The market study also advocated improving overall system interoperability, including payments and hardware and software integration with third parties.

There is some similarity here with the European Digital Markets Act (DMA), which also forces gatekeeper mobile operating systems to allow new app stores and sideloading options. The reality of enforcing such measures under the DMA has, particularly in Apple’s case, been difficult, with third-party developers facing strong headwinds when trying to take advantage of interoperability opportunities the law is intended to provide. For example, Apple responded to the law by introducing additional fees that make agreeing to their new terms unattractive, which are currently under investigation by the European Commission. Under the DMCCA, however, the CMA will craft the conduct requirements in dialogue with Apple and Google to avoid similar regulatory standoffs, but such a participatory process calls into question how radical those conduct requirements might be.

Google and Apple both responded to the investigation announcement by rehashing the privacy and security arguments made against the DMA, illustrating their resistance to making changes and their intent to water down interoperability requirements where possible. That said, potential SMS firms are not the only stakeholders involved in SMS investigations, as the CMA will also consider the opinions of “device manufacturers, software developers and user groups.” Like Google’s first investigation, the SMS decision regarding mobile ecosystems will not be reached until October 2025, with conduct requirements likely announced at the same time, so a clearer picture might not emerge until then.

New Regulatory Regime Threatened?

The DMCCA is under threat from all sides. I posited in my previous article that the participatory approach combined with the new US Presidential administration could make taming Big Tech much harder, with President Trump potentially pressuring nations with threats of tariffs if they attempt to regulate US tech giants. However, there is already significant turmoil within the UK government itself that threatens the regulatory actions of the CMA.

On January 21, the UK’s Department for Business and Trade forced CMA chair, Marcus Bokkerink, to step down and replaced him with the former Country Manager of Amazon UK and President of Amazon China, Doug Gurr, as the new interim chair. Despite the CMA’s operational independence from the government, the Labour government made the change to align with “the Government’s expectations of the CMA in supporting growth across the economy.”

In no uncertain terms, the press release makes clear the change is intended to ensure that going forward, the CMA will make “pro-business decisions” as Prime Minister Keir Starmer promises to “rip out the bureaucracy that blocks investment.” Kalyeena Makortoff and Heather Stewart report for the Guardian that it “is understood that Bokkerink’s departure is meant to send a pro-growth signal to businesses, as [Chancellor of the Exchequer, Rachel] Reeves and [Secretary of State for Business and Trade President of the Board of Trade, Jonathon] Reynolds attend Davos to meet global business leaders.” Therefore, the timing was not coincidental.

The CMA came under scrutiny in 2023 when the authority initially blocked the acquisition of gaming giant Activision Blizzard by Microsoft, although later, the deal was approved with commitments from Microsoft. Microsoft president Brad Smith called the UK bad for business and stated the EU was a preferential business environment for start-ups. Specifically, he said, “I don’t think people are going to want to start a company in a country and will then have regulators who will stop them from selling it to another company if the day arrives,” as many UK tech start-ups reportedly “hope to get bought up by a US tech giant waving a huge cheque.” The argument begs the question of what “good” or “bad” means for a nation’s business environment if the goal is merely to be acquired by one of a handful of companies. Regardless, the UK government is likely doing damage control as it hopes to attract investment and hopes the change in power of the CMA will put tech executives at ease. This is despite the fact that, in reality, the “number of mergers [the CMA] investigates that are rejected or abandoned is small and falling.”

Bokkerink, in a statement to the Financial Times, predicts that “the CMA’s approach, set out in its annual plan last week, ‘will no doubt change,’” which includes the enforcement of the DMCCA. Gurr made clear his stated aim to “help deliver business investment and economic growth,” likely using his prior Amazon experience to guide him. Given the overall deregulatory push by Starmer and the appointment of Gurr, the future of the DMCCA to curb Big Tech’s growing political power and influence appears uncertain and increasingly fragile.

For now, the CMA is plowing ahead. They announced today that the CMA’s independent inquiry group has published its provisional findings from their assessment of the cloud services market. The group recommends that Amazon and Microsoft be designated as SMS firms under the DMCCA based on their cloud services, AWS and Azure. The independent investigation will not be concluded until August 2025, after which an SMS designation investigation would need to be launched, meaning it could be a long time until a concrete outcome is seen. However, the CMA will face strong headwinds in designating cloud services at a time when the Labour government has made clear its wish to boost artificial intelligence throughout the economy, which largely relies on cloud computing, and wants to encourage cloud investors to spend their money in the UK.

In 2023, Microsoft committed to spending “£2.5 billion over the next three years to expand its next generation AI data centre infrastructure,” and in 2024, Clare Barclay, the chief executive of Microsoft UK, was “appointed to a new role overseeing the British government’s industrial strategy. Barclay will chair the Industrial Strategy Advisory Council, which will provide advice to the government in partnership with businesses, unions and other stakeholders.” Additionally, Amazon recently committed to “invest £8 billion over the next five years building, operating, and maintaining data centres in the UK.” The CMA’s efforts to regulate these giants with deep pockets and government influence will likely be seen as going against the pro-growth regime, illustrating the challenges of regulating companies on whom entire industries and governments depend.