WebProNews

Tag: Competition and Markets Authority

  • Google Reportedly Pays Apple for Chrome Search Revenue on iOS

    Google Reportedly Pays Apple for Chrome Search Revenue on iOS

    In what is sure to be a problem for both companies, an alleged secret non-compete agreement has come to light involving Chrome on iOS.

    According to The Register, Google pays Apple a portion of the revenue it receives from searches in the iOS version of its Chrome web browser. This arrangement is above and beyond what Google pays Apple to be the default search provider on the iPhone and iPad.

    The UK’s Competition and Markets Authority (CMA) issued a 356-page report in mid-June 2022 detailing the relationship between Google and Apple. Below is an excerpt from that report:

    Google pays Apple a share of the search revenue it earns from browser traffic on iOS in the following contexts: in return for being the default search provider on Safari, Google pays Apple a share of revenue derived from Safari search traffic; and pursuant to various commercial arrangements, Google pays Apple a share of revenue derived from [x] search traffic.

    The Register’s sources have told the outlet that the redacted “x” in the above text stands for “Chrome.”

    Such an arrangement would be relatively unusual since Apple doesn’t actually do anything worthy of receiving a portion of Google’s Chrome search revenue. A clue to the reasoning behind the deal may rest in a private antitrust lawsuit brought against both companies by the Alioto Law Firm in San Francisco.

    “Because more than half of Google’s search business was conducted through Apple devices, Apple was a major potential threat to Google, and that threat was designated by Google as ‘Code Red,’” the complaint argues. “Google paid billions of dollars to Apple and agreed to share its profits with Apple to eliminate the threat and fear of Apple as a competitor.”

    The Register reached out to attorney Joseph M. Alioto, who was not surprised by this report. He did, however, point out the legal issues if such a secret non-compete agreement truly exists.

    “The division of the market is per se illegal under the antitrust laws,” said Alioto.

    If The Register’s sources are correct, and the two companies have colluded to the degree reported, it could be exactly the smoking gun regulators need to take more definitive action against Apple and Google specifically, as well as Big Tech in general.

  • UK Regulators Investigating Apple and Google’s ‘Mobile Duopoly’

    UK Regulators Investigating Apple and Google’s ‘Mobile Duopoly’

    The UK is launching a market investigation into Apple and Google’s dominance in the mobile market, especially cloud gaming and web browsing.

    Apple and Google have an undisputed duopoly in the mobile market. Blackberry, Palm, Nokia, Microsoft Windows, and others have all fallen by the wayside, unable to compete with Apple’s iOS and Google’s Android.

    The UK’s Competition and Markets Authority (CMA) is investigating the companies’ duopoly following complaints from developers “that the status quo is harming their businesses, holding back innovation, and adding unnecessary costs.”

    A market investigation is an in-depth investigation that will look at the state of the market and see if competition is being negatively impacted. The CMA has the authority to impose rules on how a business operates, or can even force a company to sell off some of its businesses if they are deemed anti-competitive.

    “We want to make sure that UK consumers get the best new mobile data services, and that UK developers can invest in innovative new apps,” said Sarah Cardell, interim Chief Executive of the CMA.

    “Many UK businesses and web developers tell us they feel that they are being held back by restrictions set by Apple and Google,” Cardell added. “When the new Digital Markets regime is in place, it’s likely to address these sorts of issues. In the meantime, we are using our existing powers to tackle problems where we can. We plan to investigate whether the concerns we have heard are justified and, if so, identify steps to improve competition and innovation in these sectors.”

  • UK Regulators Will Review Broadcom/VMware Deal

    UK Regulators Will Review Broadcom/VMware Deal

    UK regulators have said they will review Broadcom’s planned purchase of VMware, creating a potential obstacle to the deal.

    Broadcom announced in May its plans to purchase VMware for $61 billion. The news sparked a wave of resignations, as well as general angst, with no one really knowing what to expect.

    According to a notice on its website, the UK’s Competition and Markets Authority (CMA) plans to conduct a review of the deal over competition concerns:

    The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

    The UK has already proven itself more willing to undo deals and acquisitions over competitive concerns, such as forcing Meta to sell off Giphy after buying the company for $400 million. Only time will tell if the Broadcom/VMware deal will survive regulators’ scrutiny.

  • It’s Official: Meta Must Sell Giphy

    It’s Official: Meta Must Sell Giphy

    The UK’s Competition and Markets Authority (CMA) has ordered Meta to sell Giphy after it acquired the company for $400 million in 2020.

    Meta announced the acquisition in May 2020 and was planning to integrate the service into Instagram. The CMA has ruled that Meta must divest itself of Giphy, ruling the acquisition would limit consumers’ social media options.

    The CMA had initially ruled Meta must sell Giphy in November 2021, but the company appealed the decision.

    The CMA published its original Phase 2 decision on this case in November 2021, finding that the deal could harm social media users and UK advertisers, and ordering Meta to sell Giphy. Meta subsequently appealed that decision to the Competition Appeal Tribunal (CAT). In July 2022, the CAT upheld the CMA’s decision on 5 of the 6 challenged grounds. In particular, the CAT said it had “no hesitation” in concluding the CMA’s finding – that the merger substantially reduced dynamic competition – was lawful.

    The one point Meta won was purely a procedural issue, but that was enough to prompt the CMA to reconsider its decision, using an independent CMA panel. After further review, however, the panel upheld its initial decision, ordering a sale.

    Stuart McIntosh, Chair of the independent inquiry group carrying out the remittal investigation, said:

    “This deal would significantly reduce competition in 2 markets,” said Stuart McIntosh, Chair of the independent panel. “It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media.

    “The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy.”

    This case will likely serve as a warning to companies that try to circumvent regulation. Despite the regulatory scrutiny Meta is under, the two companies used a legal loophole to push the deal through. Prior to the deal being announced, Giphy paid a dividend to investors, temporarily lowering its value so the deal would fly under the radar.

  • Britain Ramping Up Anti-Competition Scrutiny; Targeting Cloud Market Next

    Britain Ramping Up Anti-Competition Scrutiny; Targeting Cloud Market Next

    Britain is planning to ramp up its anti-competition scrutiny, looking at the world’s top cloud providers.

    AWS, Microsoft, and Google are the top three cloud providers in the world, accounting for roughly 81% of cloud revenue, according to Reuters. Britain’s communication regulator wants to take a look at these so-called cloud “hyperscalers.”

    It’s not surprising the UK is taking a look at the cloud market. UK’s regulatory authorities have already taken a tougher stance on Big Tech than the US. The Competition and Markets Authority (CMA) is challenging Microsoft’s Activision deal. The UK has also blocked Meta’s purchase of Giphy and is part of suit against Google that could see the search giant on the hook for a record €25 billion.

    According to Reuters, the UK has no plans to stop with an investigation of the cloud market. Messaging services, connected TVs, smart speakers, and other digital markets are next on the agenda.

  • UK’s Competition Authority Challenges Microsoft’s Activision Deal

    UK’s Competition Authority Challenges Microsoft’s Activision Deal

    Microsoft’s plans to purchase Activision Blizzard are facing pushback, with the UK’s Competition and Markets Authority (CMA) challenging the deal.

    Microsoft announced its plans to purchase Activision Blizzard in early January for a whopping $68.7 billion, making it one of the biggest tech deals in history. Microsoft has been purchasing game studios as a way to help it compete in the burgeoning metaverse. Since Microsoft is one of the top three console makers, however, the CMA has concerns the purchase could harm competition and consumers, concerns it outlined in a press release:

    The CMA has also received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem. Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming. The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services.

    The CMA’s investigation has been a Phase 1 investigation until now. After discovering valid reasons for concern, the investigation will move to Phase 2:

    At Phase 2, the CMA appoints an independent panel to examine the deal in more depth and evaluate whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger – a higher threshold than Phase 1. It typically builds on the work and evidence from Phase 1 with more third-party engagement via requests for information and use of its statutory powers in gathering internal documents. At Phase 2, the CMA will also carry out further in-depth review of the merging parties’ internal documents which show how they view competition and the market.

    The CMA first announced its investigation in early July, just weeks after US senators asked the Federal Trade Commission (FTC) to more thoroughly investigate the proposed merger, building on a review the FTC announced in February.

    Legislators and regulators around the world have been cracking down on Big Tech acquisitions and mergers. If the US or the UK torpedo the Microsoft/Activision deal, it will send a clear signal to tech companies about the current state of affairs.

  • UK Launches Competition Probe of Microsoft’s Activision Acquisition

    UK Launches Competition Probe of Microsoft’s Activision Acquisition

    The UK’s Competition and Markets Authority (CMA) has launched a probe into Microsoft’s plans to purchase Activision Blizzard.

    Microsoft made headlines in January 2022 when it announced a deal to purchase the video game company for $68.7 billion. Needless to say, a deal of that size was sure to draw regulatory scrutiny, and it certainly has. The FTC launched a review of the deal, US senators asked the FTC to investigate further, and now the CMA has launched its own probe of the deal.

    The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

    CEO Satya Nadella originally framed the deal in the context of Microsoft’s ongoing efforts to further metaverse development and the role games will play in that future. Like Apple, Meta, Google, and others, Microsoft is working to help develop the metaverse and ensure it is a major player moving forward.

    It remains to be seen if the CMA will challenge the acquisition. The agency has previously blocked major acquisitions, including Meta’s purchase of Giphy.

  • Google Faces Another UK Competition Probe

    Google Faces Another UK Competition Probe

    Google is facing another probe from the UK’s Competition and Markets Authority (CMA) over whether the company illegally favors its own services.

    Google has been under increasing pressure in multiple jurisdictions, with probes and lawsuits over how it conducts business. The CMA was already investigating Google over its ad deal with Facebook, but BBC News is reporting the watchdog is now investigating whether Google illegally used its dominance in the ad business to push its own services.

    The investigation is focused on the “ad-tech stack,” of which Google dominates all aspects. In fact, Google’s control of the entire ad stack has been a growing concern in the US as well. Senators recently introduced a bill that would prohibit a company of Google’s size from owning more than one part of the ad ecosystem.

    In the meantime, BBC News quoted a Google spokesperson saying the company welcomes the opportunity to work with the CMA:

    “We will continue to work with the CMA to answer their questions and share the details on how our systems work.

    “Advertising tools from Google and many competitors help websites and apps fund their content – and help businesses of all sizes effectively reach their customers.

    “Google’s tools alone have supported an estimated £55bn in economic activity for over 700,000 businesses in the UK – and when publishers choose to use our advertising services, they keep the majority of revenue.”

  • Facebook and Giphy Used Legal Loophole to Close Deal

    Facebook and Giphy Used Legal Loophole to Close Deal

    Giphy used a legal loophole to help Facebook purchase it without drawing regulatory scrutiny.

    Facebook has been under increased antitrust scrutiny, with the tech giant being accused of buying up smaller rivals to prevent them from becoming major threats. The company announced it was purchasing Giphy in May 2020, and the deal closed largely without issues, although the UK’s Competition and Markets Authority (CMA) recentlysaid it may force Facebook to sell Giphy.

    Despite that recent threat, it’s still somewhat surprising the company was able to purchase Giphy at all, given the level of scrutiny it was already under. According to Bloomberg, that was no accident. In fact, the two companies used a legal loophole specifically to avoid scrutiny.

    According to Bloomberg’s sources, Giphy paid its investors a dividend prior to the merger. This lowered the company’s assets, at least on paper, enough to fall below the threshold where the merger would have to be reported to antitrust officials. This allowed the deal to fly under the radar and be closed before anyone was the wiser.

    Given the current anti-Big Tech sentiment on the rise, it’s a fair bet the law allowing these stealth mergers to take place will likely come under scrutiny of its own.

  • UK Regulators May Force Facebook to Sell Giphy

    UK Regulators May Force Facebook to Sell Giphy

    Britain’s Competition and Markets Authority (CMA) has raised significant concerns over Facebook’s Giphy purchase and may force a sale.

    Facebook bought Giphy, the popular animated GIF platform, for $400 million in 2020. The social media giant wanted to integrate with Instagram. That integration has raised major concerns with the CMA.

    The CMA provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to its GIFs. Alternatively, it could change the terms of this access – for example, Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy GIFs. Such actions could increase Facebook’s market power, which is already significant. The CMA’s analysis suggests that Facebook’s platforms – Facebook, WhatsApp, and Instagram – account for over 70% of the time people spend on social media and are accessed at least once a month by 80% of all internet users.

    The CMA has made it clear that, should its concerns be confirmed, it may force Facebook to sell Giphy, the latest setback for a Big Tech company looking to acquire a smaller service.

  • UK Watchdog Investigating Nvidia’s Purchase of Arm Holdings

    UK Watchdog Investigating Nvidia’s Purchase of Arm Holdings

    Britain’s Competition and Markets Authority (CMA) is launching an investigation into Nvidia’s acquisition of Arm Holdings.

    Arm Holdings is the UK’s most successful tech firm, and is at the center of the semiconductor industry. The company’s chip designs are used in iPhones, iPads, Macs, Android phones, servers and more. The company is, along with AMD, responsible for Intel’s fall as the world’s dominant chipmaker.

    Nvidia and Arm made headlines in September when it was announced Nvidia would acquire Arm for $40 billion. The announcement was greeted with skepticism and denunciation from many corners of Britain, as well as the the industry, with Arm’s co-founder calling the deal an “absolute disaster.” In addition to the 3,000 UK jobs at stake, many are worried about the possibility of Arm’s neutrality being corrupted.

    Arm doesn’t manufacturer any of its own chips, unlike Intel and AMD. Instead, it licenses its designs to companies throughout the tech industry, who then manufacture chips based on those designs. As such, Arm is the chipmaking equivalent of Switzerland, working with everyone and excluding no one. Many industry experts are concerned that may change under Nvidia, a company that has a vested interest in preventing competitors from using Arm’s designs to gain any advantage over it.

    In addition, with the ongoing nationalization of technology — as evidenced by the US cutting off China-based Huawei from its chip suppliers — there is concern within the UK of their premier tech company being under the control of a US-based company.

    These concerns have now culminated in the CMA launching an investigation, according to The Guardian. As part of their investigation, the CMA is calling “for interested parties to submit views on the contentious deal before the launch of a formal investigation later this year.”

    It remains to be seen how the CMA will rule. However, given the stakes for the British tech industry, as well as the tech industry at large, it seems likely the CMA may seek to block the deal.