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Digital markets regulator officially launched to ensure tech giants such as Facebook and Google cannot exploit their market dominance to crowd out competition and stifle innovation online
Sebastian Klovig Skelton ,
Published: 07 Apr 2021 13: 45
A new regulator set up to scrutinise the dominance of technology giants in the UK economy has begun its work on developing legally binding codes of conduct to prevent anti-competitive behaviour in digital markets.
The Digital Markets Unit (DMU), which is based in the Competition and Markets Authority (CMA), has been asked by government to begin looking at how codes of conduct for tech giants could work in practice, with a particular focus on how the relationship between large digital platforms and smaller businesses or content providers, such as news publishers, would work.
Described as “unashamedly pro-competition” by business secretary Kwasi Kwarteng, the DMU is also set to oversee plans to give consumers more choice and control over their data, promote online competition and crack down on unfair business practices.
A market study by the CMA from July 2020 found that a lack of competition throughout the UK’s digital markets was preventing consumers from accessing new services, as well as resulting in direct harm to smaller businesses.
According to the CMA’s digital markets strategy, published early February 2021, the DMU will “oversee and enforce the new pro-competition regime for digital firms with Strategic Market Status [SMS].”
While evidence is still being gathered around which firms should be given an SMS designation, it is expected to include the likes of Facebook, Google, Amazon and Apple.
However, the DMU is currently operating in a limited capacity and will not be able to take action against tech companies until the UK government has approved legislation to officially establish its oversight powers.
“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,” said 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.”
Under a roadmap published by the Digital Regulation Cooperation Forum (DRCF) – which formed in July 2020 to strengthen the working relationships between the regulators and establish a greater level of cooperation – the DMU will work alongside other UK regulators with remits over different aspects of the digital economy.
This includes the Information Commissioner’s Office (ICO) and the Office of Communications (Ofcom).
Under the upcoming Online Safety Bill, Ofcom will oversee and enforce a statutory duty of care for online harms on internet companies and technology platforms, having the power to levy General Data Protection Regulation (GDPR)-style fines of up to 10% of global turnover for breaches of this duty.
Kwarteng said the new regulatory 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”, adding that the launch of the DMU’s work “is a significant step towards our goal of improving consumer choice and delivering better services at lower prices”.
“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,” he said.
The idea of UK DMU was initially proposed in March 2019 following the Furman Review; a six-month-long investigation into the UK’s digital economy that recommended creating a digital markets unit with skills across technology, economics and behavioural sciences to “establish the rules of the game” for companies in the sector.
Plans to establish the regulator were later unveiled by the UK government in November 2020.
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