As technology permeates every corner of society, the impact of the digital economy is more relevant than ever. As 92 per cent of UK adults are now smartphone owners, these devices have become our gateway to the world – for work, leisure, and everything in between. Yet this digital revolution, for all its benefits, has a troubling undercurrent: a stark lack of competition at its core.
Two tech behemoths, Apple and Google, wield near-absolute control over our mobile ecosystem. Their app stores serve as bottlenecks and gatekeepers, determining which applications reach consumers and under what conditions. These monopolists extract a heavy price. In 2022, the Competition and Markets Authority (CMA) revealed a shocking figure: Apple and Google make a combined £4bn every year in excess profits.
Addressing these gatekeepers’ dominance over the digital sector is not just a matter of policy – it’s an economic issue. A more level playing field for UK businesses can kickstart economic growth, boost innovation, lead to better prices for consumers and to an overall healthier digital economy. In these challenging economic times, the potential for the UK is immense: a thriving ecosystem of homegrown apps, thousands of new tech jobs, and positioning the country as a global hub for digital innovation.
In June, the last Parliament recognised the need for quick action and passed the Digital Markets, Competition and Consumers (DMCC) Act with widespread cross-party support. This DMCC Act aims to level the playing field by giving the UK’s competition watchdog, the CMA, new powers to identify market dominance, and set rules to ensure dominant companies treat developers and consumers fairly.
As autumn approaches, the new government faces a crucial decision. Jonathan Reynolds, the Business Secretary, will be called upon to greenlight the CMA’s strategy for two critical tasks: first, identifying which tech firms hold dominant market positions, and second, determining the specific rules these companies must follow to ensure fair competition in the digital marketplace.
While this might sound dry and technical, the DMCC Act can’t be put into action until this guidance is signed off. By contrast, once approved, we believe this guidance will act as a blueprint for a new, more open digital economy.
For consumers, this could mean real choice in app stores, potentially lower prices, and access to innovative digital goods and services currently held back by the current system. For developers, especially UK-based innovators, it promises a level playing field where great ideas, not just market dominance, determine success.
The road ahead isn’t without challenges, as the European Union’s Digital Markets Act (DMA) has shown us. When faced with similar requirements to the UK DMCC, Big Tech’s playbook was predictable and aggressive, focusing on obfuscation, delay, and circumvention. For instance, they’ve forced developers to display alarming “scare screens” when users try to access competitors’ services. They’ve added “junk” fees to try and recoup revenue – Apple has even started charging for app installations downloaded from rival platforms. These actions in Europe reveal how far these companies will go to protect their profits, and we can expect similar manoeuvres here in the UK.
The Labour Party showed real leadership on digital markets whilst in opposition. Now in government, the Coalition for App Fairness urges the new Cabinet to stand firm against the tactics we know are coming their way. By embracing the proposals put forward by the CMA, this growth-focused government has a unique opportunity to unlock the vast economic and innovative potential of countless businesses, paving the way for a more vibrant, competitive, and prosperous digital economy that benefits all.
This moment presents a golden opportunity for the new government. Having strengthened the DMCC Act while in opposition, it now has the chance to see it through to impactful implementation. This is an opportunity for the UK to continue showing digital leadership, and set a global standard for the open, inclusive and innovative tech ecosystem all UK consumers deserve.
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