The UK regulator, Competition and Markets Authority (CMA) has launched an investigation into Apple (AAPL) and Google’s (GOOGL) dominance in smartphone operating systems, app stores, and browsers. The regulator stated that it will assess whether these tech giants hold “strategic market status” within mobile ecosystems and examine their impact on consumers and businesses developing apps and services.
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Mobile ecosystems consist of operating systems, app stores, and smartphone-based browsers.
CMA Chief Executive Sarah Cardell pointed out that there could be potential benefits of fostering greater competition in mobile ecosystems, highlighting how this could drive innovation and create new opportunities for businesses. She noted that increased competition in the mobile ecosystem could also fuel economic growth in the UK by enabling companies to offer diverse and innovative products on Apple and Google’s platforms.
What Will the CMA Investigate?
The investigation is being conducted under the UK’s new Digital Markets, Competition, and Consumers Act (DMCC), a law designed to curb anti-competitive practices in digital markets. This legislation empowers the CMA to identify companies with significant influence in specific digital activities as having “strategic market status” and to impose changes to address anti-competitive behaviors.
The CMA’s investigation will focus on three critical areas, the level of competition between Apple and Google, the potential misuse of their market power in other activities, and potential exploitative conduct. The findings will consider the experiences of both mobile users and developers creating innovative content and apps.
AAPL Responds to the UK Investigation
In response, an Apple spokesperson told CNBC, “In the U.K. alone, the iOS app economy supports hundreds of thousands of jobs and makes it possible for developers big and small to reach users on a trusted platform.” Furthermore, AAPL highlighted the significant economic impact of the iOS app ecosystem in the UK, which supports numerous jobs and provides developers with a trusted platform. Apple pledged to collaborate constructively with the CMA throughout the investigation.
Is Apple a Buy, Hold or Sell?
Analysts remain cautiously optimistic about AAPL stock, with a Moderate Buy consensus rating based on 18 Buys, seven Holds, and four Sells. Over the past year, AAPL has increased by more than 10%, and the average AAPL price target of $242.07 implies an upside potential of 8.2% from current levels
