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UK Plans to Probe Apple, Google’s Mobile Browser Dominance

08 May 2018, US, Mountain View: Google's logo on the facade of parent company Alphabet's headquarters. (dpa)
08 May 2018, US, Mountain View: Google's logo on the facade of parent company Alphabet's headquarters. (dpa)
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UK Plans to Probe Apple, Google’s Mobile Browser Dominance

08 May 2018, US, Mountain View: Google's logo on the facade of parent company Alphabet's headquarters. (dpa)
08 May 2018, US, Mountain View: Google's logo on the facade of parent company Alphabet's headquarters. (dpa)

Britain's competition watchdog said it was planning to investigate the market dominance of Apple Inc and Google's mobile browsers, as well as the iPhone maker's restrictions on cloud gaming through its app store.

The Competition and Markets Authority (CMA) said on Friday it was also taking enforcement action against Alphabet Inc's Google over its app store payment practices.

It said the two tech giants had an "effective duopoly" on mobile ecosystems that gave them a stranglehold on operating systems, app stores and web browsers on mobile devices.

"When it comes to how people use mobile phones, Apple and Google hold all the cards," CMA Chief Executive Andrea Coscelli said following the publication of a report on mobile ecosystems.

"As good as many of their services and products are, their strong grip on mobile ecosystems allows them to shut out competitors, holding back the British tech sector and limiting choice."

It said 97% of all mobile web browsing in Britain last year was powered by either Apple's or Google's browser engine, and in addition Apple banned alternatives to its own browser on iPhone.

The CMA said it was concerned this severely limited the potential for rival browsers to differentiate themselves from Apple's Safari, for example on features such as speed and functionality.

Apple said in a statement it had "created a safe and trusted experience users love and a great business opportunity for developers" through its ecosystem.

"We respectfully disagree with a number of conclusions reached in the report, which discount our investments in innovation, privacy and user performance - all of which contribute to why users love iPhone and iPad and create a level playing field for small developers to compete on a trusted platform," a spokesperson said.

"We will continue to engage constructively with the CMA to explain how our approach promotes competition and choice, while ensuring consumers’ privacy and security are always protected."

Google said smartphones using its Android operating system offered people and businesses more choice than any other mobile platform, and its Google Play app store has been the launchpad for millions of apps.

"We regularly review how we can best support developers and have reacted quickly to CMA feedback in the past," a Google spokesperson said.

"We will review the report and continue to engage with the CMA."

The regulator said it was also worried about Apple blocking the emergence of cloud gaming services, which allow high-quality games to be streamed rather than individually downloaded.

"By preventing this sector from growing, Apple risks causing mobile users to miss out on the full benefits of cloud gaming," it said.

The CMA said its proposed investigation would further assess its concerns and could result in legally binding orders requiring changes to be made to Apple's and Google's practices.

The consultation on the proposed the market investigation reference will close on 22 July.

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Technology

Meta Faces Historic Antitrust Trial That Could Force It to Break off Instagram, WhatsApp 

The Meta logo is seen at the Vivatech show in Paris, France, June 14, 2023. (AP)
The Meta logo is seen at the Vivatech show in Paris, France, June 14, 2023. (AP)
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Meta Faces Historic Antitrust Trial That Could Force It to Break off Instagram, WhatsApp 

The Meta logo is seen at the Vivatech show in Paris, France, June 14, 2023. (AP)
The Meta logo is seen at the Vivatech show in Paris, France, June 14, 2023. (AP)

Meta Platforms Inc. faces a historic antitrust trial beginning Monday that could force the tech giant to break off Instagram and WhatsApp, startups it bought more than a decade ago that have since grown into social media powerhouses.

The looming antitrust trial will be the first big test of President Donald Trump’s Federal Trade Commission’s ability to challenge Big Tech. The lawsuit was filed against Meta — then called Facebook — in 2020, during Trump's first term. It claims the company bought Instagram and WhatsApp to squash competition and establish an illegal monopoly in the social media market.

Meta, the FTC argues, has maintained a monopoly by pursuing CEO Mark Zuckerberg's strategy, "expressed in 2008: ‘It is better to buy than compete.’ True to that maxim, Facebook has systematically tracked potential rivals and acquired companies that it viewed as serious competitive threats."

Facebook also enacted policies designed to make it difficult for smaller rivals to enter the market and "neutralize perceived competitive threats," the FTC says in its complaint, just as the world shifted its attention to mobile devices from desktop computers.

"Unable to maintain its monopoly by fairly competing, the company’s executives addressed the existential threat by buying up new innovators that were succeeding where Facebook failed," the FTC says.

Facebook bought Instagram — then a scrappy photo-sharing app with no ads and a small cult following — in 2012. The $1 billion cash and stock purchase price was eye-popping at the time, though the deal's value fell to $750 million after Facebook's stock price dipped following its initial public offering in May 2012.

Instagram was the first company Facebook bought and kept running as a separate app. Up until then, Facebook was known for smaller "acqui-hires" — a type of popular Silicon Valley deal in which a company purchases a startup as a way to hire its talented workers, then shuts the acquired company down. Two years later, it did it again with the messaging app WhatsApp, which it purchased for $22 billion.

WhatsApp and Instagram helped Facebook move its business from desktop computers to mobile devices, and to remain popular with younger generations as rivals like Snapchat (which it also tried, but failed, to buy) and TikTok emerged. However, the FTC has a narrow definition of Meta's competitive market, excluding companies like TikTok, YouTube and Apple's messaging service from being considered rivals to Instagram and WhatsApp.

"The FTC already has the difficult task, whether it’s looking at 10 years ago or five years ago or today, of trying to define what is the market we’re talking about in a sufficiently narrow way that it can show Meta has a ton of power in that market," said Paul Swanson, an antitrust attorney for the law firm Holland & Hart. "And I do think that challenge has gotten harder as the years have gone by and we see more and more potential competitors in social media spaces."

Meta, meanwhile, says the FTC’s lawsuit "defies reality."

"The evidence at trial will show what every 17-year-old in the world knows: Instagram, Facebook and WhatsApp compete with Chinese-owned TikTok, YouTube, X, iMessage and many others. More than 10 years after the FTC reviewed and cleared our acquisitions, the Commission’s action in this case sends the message that no deal is ever truly final. Regulators should be supporting American innovation, rather than seeking to break up a great American company and further advantaging China on critical issues like AI," the company said in a statement.

In a filing last week, Meta also stressed that the FTC "must prove that Meta has monopoly power in its claimed relevant market now, not at some time in the past." This, experts say, could also prove challenging since more competitors have emerged in the social media space in the years since the company bought WhatsApp and Instagram.

Meta's fate will be decided by US District Judge James Boasberg, who late last year denied Meta's request for a summary judgment and ruled that the case must go to trial.

Boasberg "seems to be skeptical" of the FTC's narrow market definition in his rulings to date, Swanson said. He added that the judge also said it is a "fact question," which means he is open to hearing what the FTC and its experts have to say to define that narrow market.

While the FTC may face an uphill battle in proving its case, the stakes are high for Meta, whose advertising business could be cut in half if it's forced to spin off Instagram.

"Instagram is now Meta’s biggest money maker in the US, its most lucrative market, where the app accounts for 50.5% of the company’s ad revenues in 2025. Instagram has also been picking up the slack for Facebook on the user front, particularly among young people, for a long time," said Emarketer analyst Jasmine Enberg.

"The trial also comes as Meta is trying to bring back OG Facebook in an effort to appeal to Gen Z and younger users as they join social media. Social media usage is far more fragmented today than it was in 2012 when Facebook acquired Instagram, and Facebook isn’t where the cool college kids hang out anymore. Meta needs Instagram to continue growing, especially as more advertisers think Instagram-first with their Meta budgets," she added.

But Meta isn't the only technology company in the sights of federal antitrust regulators, Google and Amazon face their own cases. The remedy phase of Google's case is scheduled to begin on April 21. A federal judge declared the search giant an illegal monopoly last August.

"A big theme here is we are applying 19th-century laws to 21st-century markets. And I think it’s an open question whether the judgment developments to antitrust law can keep up with markets as they are changing — these fluid and dynamic tech markets in particular," Swanson said. "And this will be a case that speaks directly to that."