Apple Inc and Alphabet Inc’s Google face online gaming probe in UK by competition watchdog

Apple Inc (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG) owned Google are facing an “in-depth” investigation into their dominant position by the UK’s competition watchdog.

With 97% of online activity in the UK taking place on browsers powered by Apple or Google, the Competition & Markets Authority (CMA) said the US tech giants are imposing restrictions which could potentially hamper the growth of other browsers, web developers and cloud gaming service providers.

As part of an initial investigation into this corner of the sector launched in June, the CMA said it received “substantial support for a fuller investigation into the way that Apple and Google dominate the mobile browser market and how Apple restricts cloud gaming through its App Store ,” following a June consultation.

This, it said, has led it to now move to an “in-depth Phase 2 market investigation”.

Noting that computer games are a multi-billion pound industry in the UK, with millions of players, including more than 800,000 users of cloud gaming services, the CMA said restrictions on the distribution of games on mobile devices “could hamper growth in this sector, meaning UK gamers miss out”.

Many of the calls for a deeper probe came from browser vendors, web developers, and cloud gaming service providers, who reportedly say that the way that Google and Apple currently operate is harming their businesses, holding back innovation, and adding unnecessary costs.

Web developers also complained that Apple forces them to create bespoke mobile apps when a website might be sufficient, through the restrictions it places, combined with potential underinvestment in its browser technology that leads to more bugs and glitches when building web pages.

The CMA previously said that if it does not intervene in this area the US tech giants “are likely to maintain, and even strengthen, their grip over the sector, further restricting competition and limiting incentives for innovators”.

There are several computer games developers and publishers listed in London, including Frontier Developments PLC (AIM:FDEV), Team17 Group PLC (AIM:TM17), tinyBuild Inc (LSE:TBLD) and Devolver Digital Inc (AIM:DEVO), while Keywords Studios PLC (AIM:KWS, OTC:KYYWF) provides services to the sector.

Both Apple and Google are also among the tech firms, including Meta Platforms Inc (NASDAQ:FB) owned Facebook, that UK media regulator Ofcom recently suggested may need new regulation, amid concerns over their monopolistic ability to control which news stories users see.

Having had it fairly easy for many years, tech companies are facing growing regulatory vigilance around the world, with Joe Biden having promised an antitrust crackdown, though this has been opposed by multi-million defenses from the sector.

On November 1, the European Union’s Digital Markets Act came into force, a process that is designed to force Amazon Inc, Google, Meta to make their platforms more open and interoperable in the coming year – with Apple also having to switch all its new iPhones over to USB-C chargers thanks to a new EU charging standard coming in 2024.

Elsewhere, Google recently received two fines, totaling well over £200m, by India’s competition watchdog, for “abusing” its dominant position in the market, while the tech giant also agreed to pay US$391.5m in the USA to settle legal action around its tracking of user’s locations.

Meanwhile, both Google and Apple defended the need for restrictions, saying they were there to protect users, with the latter saying it would “constructively” engage with the investigation.

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