The UK’s antitrust watchdog will take a close look at the music streaming market.
Today the Competition and Markets Authority (CMA) announced that it will be conducting a market study of music streaming as soon as possible, as its latest piece of work aimed at expanding competition in digital markets.
It uses market studies to identify competition and consumers issues — and, if needed, to look at how best to tackle problems.
The development could have implications for how mobile app stores and music streaming giants like Apple Music and Spotify can operate in the U.K. in the future — if the CMA decides it needs to step in and impose corrective measures.
The exact scope of the study is yet to be determined but in a letter to MPs the regulator said it will prioritize the work — writing:
“On 13 October, the Board considered initial proposals to carry out a markets project on music streaming. They agreed that work in this area aligned with the CMA’s prioritisation principles, and that it supported a strategic goal of the CMA to foster effective competition in digital markets, ensuring they operate in a way that promotes innovation and the consumer interest. On this basis, the Board agreed that there was merit in taking forward a market study. They also agreed, in the light of the concerns you have collectively expressed, that this work should be prioritised: that is, it should be the next market study that the CMA launches. CMA staff will now prioritise more detailed further work to refine and scope this project. This will again be considered by the Board, with a view to formally commencing the market study as soon as practically possible.”
The move follows a report by a parliamentary committee this summer which identified concerns over the economics of the music streaming market — such as the possible dominance of major music labels and the potential for contractual agreements between them and streaming services which could stifle innovation.
Last month, in its response to the DCMS Select Committee report, the government asked the CMA to examine the economics of the market to dig into concerns around transparency and fairness.
In a statement today, Andrea Coscelli, CEO of the CMA, said:
The U.K. has a love affair with music and is home to many of the world’s most popular artists. We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers.
Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80% of all music listened to in this country. A market study will help us to understand these radical changes and build a view as to whether competition in this sector is working well or whether further action needs to be taken.
The CMA is building out its knowledge base on all things digital and is set to have an expanded role in overseeing the digital sphere as the government is in the process of reforming digital competition rules to respond to concerns about the impact of tech giants.
A Digital Markets Unit has already been set up inside the regulator — pending legislation to establish its full powers. But the CMA has not been sitting on its hands waiting for the government to pass reforms.
It has previously conducted a study of the online advertising market — which led to a raft of concerns being identified that appear to be informing the government’s reshaping of U.K. digital competition rules.
It has also stepped in and put a regulatory brake on Google’s plans for phasing out third party tracking cookies — garnering commitments from the tech giant over how its planned “Privacy Sandbox” alternative will function. That investigation remains ongoing.
Earlier this year the CMA also opened a market study of Apple and Google’s dominance of the mobile ecosystem. And Apple’s App Store is simultaneously under investigation by the regulator.
On the music streaming front, European Union regulators are a little ahead of their counterparts in the U.K. — back in April the Competition Commission charged Apple with an antitrust breach related to competition in the music streaming services market.
European music streaming rival, Spotify, had long complained about Apple’s T&Cs being “unfair,” although the EU’s competition chief, Margrethe Vestager, claimed its case is not about Spotify — saying that rather it’s about the conditions that Apple imposes on all music streaming providers that are trying to reach customers via its App Store.
Since the EU has identified concerns it’s a fairly safe bet the CMA’s market study will also find some issues to be addressed.
But it remains to be seen what the U.K. regulator may suggest if it does find problems — with a range of possible outcomes available to it, such as making recommendations to government to change regulations or public policy; encouraging relevant businesses to self-regulate; taking consumer or competition law enforcement action against firms; or opening a more in-depth market investigation.