Fair Play: How Competition Policy Drives UK Growth and Challenges Big Tech's App Store Power

In this episode of Upwardly Mobile, we delve into "Fair Play: How competition policy can drive growth," a briefing paper from the Institute for Public Policy Research (IPPR). Authors George Dibb and Tommaso Valletti argue that a robust competition policy, enforced by a responsive regulator like the Competition and Markets Authority (CMA), is a cornerstone of shared, equitable growth in the UK.The paper highlights how the UK economy is grappling with rising market concentration and stagnant productivity. It contends that concentrated markets stifle innovation, discourage investment, and suppress dynamism, contributing to a "low-growth trap". Dominant firms, particularly foreign tech giants, are shown to extract wealth from the UK, making it harder for domestic startups to compete. Furthermore, unchecked monopolies pose a significant risk to democratic institutions by concentrating economic and political influence.A key focus is the economic case for robust competition policy. The authors explain that without competition, markets fail to drive innovation and fair treatment for workers and consumers; instead, monopolists extract profits and crush competitors. They address misconceptions, such as the idea that mergers are always good for investment, clarifying that competition policy targets large firms where efficiency arguments no longer apply.The briefing paper calls for reforms to the CMA, advocating for a shift towards a more proactive role aligned with UK growth objectives. Recommendations include accelerating interventions against exploitative practices (like 'big tech' fees), defining a clearer 'growth' mandate focused on wage growth and SME dynamism, streamlining processes, and better integrating competition policy with industrial strategy and trade policy.A prominent case study examined is the lack of competition in app stores, which allows Google and Apple to extract substantial fees from app developers. The typical commission on in-app purchases is 30%, or 15% for small businesses. This effectively acts as an "app store tax," representing a significant revenue transfer away from developers, estimated to be between £0.8 billion and £1.3 billion annually by 2025 if fees were reduced to a 12% benchmark. The paper suggests that well-designed regulation, such as the Digital Markets, Competition and Consumers (DMCC) Act, can drive innovation and create fairer markets.Ultimately, "Fair Play" positions robust competition policy not as anti-business, but as a pro-business, pro-worker, pro-growth agenda that ensures markets reward innovation and hold economic power accountable.

Read the full paper: You can download "Fair play: How competition policy can drive growth" at: http://www.ippr.org/articles/fair-play

Please note: The Coalition for App Fairness is a sponsor of this briefing paper.  Approov Limited is the sponsor of this podcast: www.approov.io 

Keywords: Competition policy, antitrust, CMA, UK economy, economic growth, productivity, innovation, market concentration, app stores, Big Tech, digital markets, Fair Play, IPPR, George Dibb, Tommaso Valletti, UK regulation, industrial strategy, digital markets act, DMCC, monopolies, oligopoly, tech giants, app developer fees.