Earlier in the year Apple filed an application to review the CMA’s decision to make a Market Investigation Reference (MIR) into mobile browsers and cloud gaming. The hearing took place on March 10th 2023.
Apple’s appeal pivoted on both the chronology of the MIR – by law the decision to issue a final report must be made within 12 months of the final report (the CMA waited 17 months) – as well as the fact that the MIR contradicted an earlier decision, provisionally concluding against an investigation.
Apple contended that the CMA had violated the statutory regime laid out in the Enterprise Act 2022 and consequently, the MIR must be quashed.
The CMA’s defence – that the decision to launch an MIR in November stemmed from its right to make a free-standing investigation – was dismissed by the CAT, who sided with Apple in finding the MIR ultra vires.
See the CAT’s full judgment linked here.
According to a statement made on Friday, the CMA are currently considering “seeking permission to appeal”. The CAT’s judgment, which constrains an authority that has been granted the power to do an MIR at any time to a strict timeline, might be viewed as overly harsh and, moreover, obstructive to the public functions of the CMA’s investigation. The Court of Appeal might be persuaded that justice is not being well served, whatever the procedural correctness of the CAT’s decision.
It is possible that this might be picked up by another authority. Ofcom, for instance, made referrals on cloud markets last week. The FCA, likewise, is consulting on the impact of platforms on retail banking, where platforms control over both the browser and mobile ecosystem is highly relevant. They might, in turn, be inclined to investigate the platforms’ conduct in app store billing amongst other things.
The CAT have precluded the CMA from taking a “second bite of the cherry” in a freestanding MIR. However, one possibility, yet to be contemplated in other commentary, would be to pick up a similar investigation with an expanded evidentiary base.
The previous investigation centred on mobile browsers and cloud gaming, but the harm that the CMA sought to address could equally be covered by an MIR into mobile app and web app payments. Both Apple and Google’s 30% fee on in-app payments and up to 30% cut of revenues could, for instance, remain within scope without replicating the focus of the CMA’s MIR.
The CMA could concurrently investigate payment in browsers, which MOW noted in submissions as a means by which browser vendors could mitigate any remedies they might be forced to accept in the app ecosystem. We have already shared with the CMA our complaint (see here) regarding the Payment API, jointly pushed through the W3C by Google and Apple, which gives browser vendors the opportunity to manipulate the presentation of payment cards in the wallet and potentially restrict the availability of alternative payment options.
Remedies would ideally constrain platforms from shifting their monopoly profits from the app ecosystem to mobile platforms.
The takeaway from the CAT’s judgment is that the CMA was out of time, not that it was unjustified in its findings of market failure. Swift action, based on alternative harm, would be the perfect response.
We will be following any developments in this space with keen interest.