By 
Amid growing concerns over the increasing dominance of Big Tech in digital payment ecosystems, UK financial regulators have opted to defer to the Competition and Markets Authority (CMA) in scrutinizing Apple and Google’s control over mobile wallets. The regulators will support the CMA’s broader investigations into the tech giants’ mobile ecosystems while focusing on other regulatory aspects, including operational resilience and consumer protection.
CMA’s Investigation into Apple and Google
Last month, the CMA initiated investigations into whether Apple and Google hold strategic market control over mobile ecosystems, covering operating systems, app stores, and mobile browsers. A key component of this inquiry involves evaluating the competitive landscape of digital wallets, an area where the two companies exert significant influence.
Regulatory Concerns and Market Trends
Simultaneously, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have been conducting independent assessments on the impact of Big Tech’s involvement in digital payments. Their findings highlight significant shifts in consumer behavior, with digital wallet transactions surging from 8% in 2019 to 29% in 2023. Notably, around 20% of cardholders used digital wallets for more than half of their card transactions, and 10% relied on them for over 75% of transactions.
Following a Call for Information in July, the FCA and PSR have now published stakeholder feedback, which outlines various concerns about the competitive dynamics of digital wallets.
Key Issues Raised by Stakeholders
- Restrictive Practices: Apple’s longstanding restrictions on NFC access were highlighted as a barrier to competition, preventing third-party providers from offering alternative payment solutions.
- Ecosystem Control: Both Apple and Google benefit from ecosystem control, leveraging pre-installed digital wallets to steer consumers toward their own payment services, limiting competition.
- Limited Payment Choices: Respondents noted that dominant digital wallets primarily facilitate card payments, with minimal support for alternative payment methods such as account-to-account transfers, stablecoins, or a potential central bank digital currency (CBDC).
Regulatory Stance and Next Steps
In a formal response to the CMA, the FCA and PSR acknowledged the competitive concerns raised and stressed the need for further examination. However, they concluded that the CMA, through its expanded powers under the Digital Markets, Competition and Consumers (DMCC) Act, is best positioned to lead the investigation and enforce any necessary conduct regulations.
Beyond competition concerns, the FCA and PSR will collaborate with His Majesty’s Treasury (HMT) to address broader issues stemming from digital wallet expansion, including operational resilience, consumer rights, and regulatory compliance.
As regulatory scrutiny intensifies, the outcomes of the CMA’s investigation could shape the future competitive landscape of digital payments in the UK, potentially prompting new compliance requirements for Big Tech’s financial services operations.
Comments