Beef up CMA to tackle Apple and Google app store duopoly and boost growth, says IPPR

15 May 2025 12:42 PM

Maintaining strong UK competition policy is crucial to increasing investment, boosting innovation and growing the economy, according to a new report from the Institute for Public Policy Research (IPPR)

The think tank says that despite growing political criticism and intense lobbying – often from powerful tech giants – the UK government should strengthen, not weaken, the powers of the Competition and Markets Authority (CMA) to create fairer, more dynamic markets. IPPR argues that effective competition policy is key to a pro-worker, pro-business economic agenda.

New analysis for the report finds that the subjects of ongoing CMA investigations, Apple and Google, may be stifling UK businesses from growing, due to their control of the two major app stores.

The two tech giants charge a standard commission of 30 per cent on in-app purchases with a reduced rate of 15 per cent for small businesses. Roughly nine tenths of revenues come from the higher rate. This is despite their marginal costs being very low, according to the CMA, with Apple’s gross profit margin on the app store averaging between 75 and 100 per cent. Apple and Google are likely to have made total revenues of between £1.5 billion and £2.4 billion from app stores in the UK this year, according to IPPR estimates.  

In a more competitive market this commission would likely be a lot lower. The think tank says if these fees were reduced to 12 per cent – a level cited by the CMA based on more open markets like PC gaming – it would result in up to £1.4 billion of revenue shifting from Apple and Google to app developers from UK transactions this year, based on the same estimates. IPPR projects this figure to rise to up to £3.3 billion by the end of this parliament in 2029. This money would be far more likely to be reinvested by UK-based developers into innovation, job creation and wage growth, the report argues.

IPPR says the case is a clear example of how concentrated market power allows dominant firms to extract wealth from the UK economy, to the detriment of high-potential startups, their investors and their workers.

The report challenges the idea that competition policy is “anti-business” or holds back economic growth. Instead, it argues that robust enforcement is essential to creating markets that reward innovation over extraction – and to building a stronger, fairer economy.

To rebalance power away from a handful of corporate giants and in favour of UK businesses and workers, IPPR is calling on the government to empower the CMA with a stronger mandate. In particular, the CMA should:

Dr George Dibb, associate director for economic policy at IPPR, said:

“Enforcing the UK’s competition rules isn’t anti-business – it's a pro-business, pro-worker, pro-growth agenda. If we weaken those rules, we’re letting dominant firms and tech giants hold back innovation and investment. That’s money being extracted from British businesses and workers, and funnelled to monopolistic firms, often overseas.

“In the US, there’s a bipartisan consensus between Trump and Biden on confronting dominant firms through competition policy, with both taking legal action against Google and Facebook. The UK government must back the CMA to act more decisively – to ensure our economy supports exciting new enterprises, not just entrenched incumbents.”

Lord Andrew Tyrie, former chair of the CMA, said:

"As this timely paper rightly suggests, competition is the lifeblood of free enterprise and healthy businesses. We don’t have enough of it. The UK’s competition authorities, led by the CMA, have failed to prevent rising concentration and declining competition in many markets, as have competition authorities in many other jurisdictions. Lower growth, less innovation and widening income differentials are the consequence. The CMA has recently been given huge new powers and tools. It now needs to deploy them, and vigorously."

Craig Beaumont, executive director at the Federation of Small Businesses, said:  

"UK small businesses know that competition policy, done right, isn’t anti-business; it’s pro-entrepreneurialism. It opens opportunities for innovation, investment and insurgents.  

“At FSB we support IPPR's approach to take proactive steps on digital markets, rather than regulating 'after the fact' and after harm occurs - requiring late and often slow corrective action. In particular, we welcome the push to champion SME dynamism over incumbent protection - we already see early-stage changes and improvements to the CMA's mandate for growth, which FSB has pitched small business growth ideas in to, and now want to see more."

Dr George Dibb, the report’s author, is available for interview  

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