UK antitrust body will be able to fine Apple and Google 5% of their global turnover per day
The Competition and Markets Authority, a UK antitrust agency, will receive legal powers that allow it to fine Apple and other tech companies billions of dollars. It is the apparent second U-turn by British officials.
The CMA’s powers will now go even further than originally announced, allowing it to fine companies 5% of their daily global turnover per day …
Background
If you’re not up-to-date with the background to this, a neck brace is recommended to avoid whiplash.
The UK opened an antitrust investigation into Apple back in March 2021.
The UK’s competition watchdog announced today plans to investigate whether the App Store limits competition. The government announced that the Competition and Markets Authority (CMA) will be running the investigation.
A second investigation followed, this time into both Apple and Google. That one concluded that both Apple and Google do indeed have too much power. Apple can impose any App Store terms or commissions it likes because everyone who wants to sell an iPhone application must do so through Apple.
This was a very worrying development for Apple, since the British government said that it would give the CMA the power to overrule the policies of tech giants, and to levy fines of up to 10% of their total global turnover. This is known as having statutory powers: the ability to impose penalties directly, without needing to involve parliament.
However, it was reported earlier this week that the government had shelved plans to grant statutory powers to the CMA. This would mean that the antitrust body could recommend fines and other actions, but parliament would have to vote on those recommendations.
UK will be able to fine Apple and Google billions of dollars
However, the government has now said that the CMA will get the promised powers. BBC News reports.
It had been rumoured that the Digital Markets Unit [part of the CMA] would not be given a legal footing – and would therefore lack bite. The government however has stated that it would introduce legislation in order to give the regulator a legal footing “due course .”
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The DMU has the power to crack down on certain “predatory acts” by some companies. The regulator will also have the power to fine companies up to 10% of their global turnover if they fail to comply.
Indeed: The government has now stated that the CMA can levy higher penalties than initially announced.
Tech firms could be handed additional penalties of 5% of daily global turnover for each day an offence continues.
Other antitrust authorities have used this power, such as the Dutch dating app case. However, the maximum sum there was $5M per week; there would be no maximum for the CMA.
9to5Mac’s Take
When an official announcement states one thing and a source reports on a U-turn being planned, there are three possible outcomes for the report :
- It was right
- It was wrong
- The government leaked a possible plan to test reactions
Where the U-turn doesn’t happen, there’s a fourth possibility: the report was correct, but reaction has been so strongly negative that the government changes its mind.
In this instance, the fourth option seems most probable. This is because in accordance with the original plan, the power would have been granted during the next parliament term. The government has now used three giveaway words – ‘in due course’ – which suggests it won’t happen in the next term. That’s a pointer to a hasty change of plan.
Of course, having powers, and actually maxing them out, are two very different things. It seems likely that the CMA would begin with far lower fines initially, before gradually ramping them up. The CMA and Apple would then have a dispute before either side backs down.
The smart money is on some kind of clunky compromise, like the one Apple proposed in the Netherlands: where developers can choose to use third-party payment platforms, but the Cupertino company would only reduce its commission to 27%. The Dutch regulator has rejected that, so the final compromise is as yet unknown, but it seems likely that they will meet in the middle somewhere – and that this will also provide the basis for a UK deal too.
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