UK watchdog to boost online competition
April 7, 2021
By Colin Mann
A tough new UK regulator to help make sure tech giants such as Facebook and Google cannot exploit their market dominance to crowd out competition and stifle innovation online has launched.
The Digital Markets Unit (DMU), based in the Competition and Markets Authority (CMA), will oversee plans to give consumers more choice and control over their data, promote online competition and crack down on unfair practices which can often leave businesses and consumers with less choice and more expensive goods and services.
According to government, online platforms bring huge benefits for businesses and society. They make work easier and quicker and help people stay in touch. But there is a consensus that the concentration of power among a small number of firms is curtailing growth and having negative impacts on consumers and businesses which rely on them.
In November 2020, the government announced a new unit would be set up to enforce a new pro-competition regime to cover platforms with considerable market power – known as strategic market status. The new unit has today kicked off its first work programme as it launches in ‘shadow’ non-statutory form ahead of legislation granting its full powers.
The government has asked it to begin looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups such as small businesses which rely on them to advertise or use their services to reach their customers. It will take a sector-neutral approach in examining the role of platforms across a range of digital markets, with a view to promoting competition
The Digital Secretary has asked it to work with the communications regulator Ofcom to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers, including to ensure they are as fair and reasonable as possible.
This would pave the way for the future rules of the road and is alongside the wider work being done by the government, following the Cairncross Review and the package of support through the pandemic, to boost the sustainability of the press.
“Today is a major milestone in the path to creating the world’s most competitive online markets, with consumers, entrepreneurs and content publishers at their heart,” declared Digital Secretary Oliver Dowden. “The Digital Markets Unit has launched and I’ve asked it to begin by looking at the relationships between platforms and content providers, and platforms and digital advertisers. This will pave the way for the development of new digital services and lower prices, give consumers more choice and control over their data, and support our news industry, which is vital to freedom of expression and our democratic values.”
“This is a significant step towards our goal of improving consumer choice and delivering better services at lower prices,” added Business Secretary Kwasi Kwarteng. “The UK has built an enviable reputation as a global tech hub and we want that to continue – but I’m clear that the system needs to be fair for our smaller businesses, new entrepreneurs and the wider British public. Our new, unashamedly pro-competition regime will help to curb the dominance of tech giants, unleash a wave of innovation throughout the market and ensure smaller firms aren’t pushed out.”
“People shopping on the Internet and sharing information online should be able to enjoy the choice, secure data and fair prices that come with a dynamic and competitive industry,” stated Andrea Coscelli, Chief Executive of the Competition and Markets Authority (CMA). “Today is another step towards creating a level playing field in digital markets. The DMU will be a world-leading hub of expertise in this area and when given the powers it needs, I am confident it will play a key role in helping innovation thrive and securing better outcomes for customers.”
The government will consult on the design of the new pro-competition regime dring 2020 and legislate to put the DMU on a statutory footing as soon as Parliamentary time allows.
The unit will work closely with the CMA enforcement teams already taking action to address practices by digital firms, which harm competition and lead to poor outcomes for consumers and businesses. This includes taking enforcement action against Google and Apple, and scrutinising mergers involving Facebook and eBay.
The government has also published an outline of the new unit’s function and role for its first year of operation. It includes working alongside business, the government and academia to compile the necessary evidence, knowledge and expertise so that once the new pro-competition regulatory regime is in place it can begin operation as quickly as possible.
As countries around the world grapple with these issues, the unit will coordinate with international partners so the UK remains a global leader in shaping the debate in this area.
The UK is already discussing its approach to digital competition with international partners through bilateral engagement and as part of its G7 presidency. The Digital Secretary will host a meeting of digital and tech ministers in April as he seeks to build consensus for coordination on better information sharing and joining up regulatory and policy approaches.
The Digital Markets Unit will work closely with important regulators including the Information Commissioner’s Office, Ofcom and the Financial Conduct Authority so that consumers and businesses are comprehensively protected and the new regime is coherent and effective.
It will be led by Will Hayter, who takes over following his work at the Cabinet Office supporting the UK’s transition out of the EU.
The work will inform future legislation in this area and follows the CMA’s market study into online platforms and digital advertising.