Dark Clouds Gather – An Analysis of Apple and Google’s Restrictions on Cloud Gaming

Abstract

Cloud gaming represents a new model of video game distribution. It involves playing games that are streamed from a remote server (the cloud), and has the potential to revolutionize gaming as it is, at least in theory, device-agnostic, allowing AAA games to be played on any device with a connection to the internet. However, Apple blocks the emergence of cloud gaming apps on its Apple App Store, and Google, although not completely blocking them, still imposes restrictions on them. Apple’s prevention of cloud gaming apps has led the UK Competition and Markets Authority to make a Market Investigation Reference, which could lead to the authority imposing remedies on Apple.

This paper provides an introduction to cloud gaming and explains why it is an important development that offers huge potential for competition and innovation in digital markets. It then discusses Apple’s prevention of cloud gaming apps and examines Apple’s stated rationale for this policy, after which it also touches on Google’s restrictions. This is followed by a section that sets out other reasons why it may be in Apple’s commercial interest to block the emergence of cloud gaming apps, looking in particular at whether this may be linked to a desire to protect its position in the distribution of apps on iOS devices and its revenues from the sale of hardware. After this, the paper discusses how these restrictions have led to the UK Market Investigation Reference, and how they may be treated under the forthcoming EU Digital Markets Act.

Keywords: Cloud gaming, Apple, App Store, Google, Google Play, CMA, Digital Markets Act, DMA, antitrust, UK competition law, EU competition law, market investigation reference

JEL Classification: K21, K42, L12, L41, L 82