Competition and Markets Authority to implement tougher competition laws on tech giants such as Facebook and Google in 2021
The United Kingdom is to implement tougher competition rules on big name tech firms in 2021, amid tightening regulations on tech around the world.
The European Union is already planning on introducing tougher competition laws soon, but with the UK leaving the EU, it was felt it also needed to tighten the rules governing tech firms such as Google and Facebook.
The move was not unexpected. In December 2019, the UK competition regulator, the Competition and Markets Authority (CMA), warned it would consider implementing tougher rules on tech giants over competition concerns.
Almost a year later, and the CMA has announced that its new regime will be enforced by a dedicated unit within the CMA
It said the government will “set up Digital Markets Unit to oversee a pro-competition regime for platforms including those funded by digital advertising, such as Google and Facebook.”
This dedicated unit (set to begin next April) will “work closely with regulators including Ofcom and the Information Commissioner’s Office to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market, such as Google and Facebook, to ensure consumers and small businesses aren’t disadvantaged.”
The government admitted that online platforms bring huge benefits for businesses and society.
But there is growing consensus in the UK and abroad that the concentration of power amongst a small number of tech companies is curtailing growth in the tech sector, reducing innovation, and potentially having negative impacts on the people and businesses that rely on them.
To this end the government intends to enforce a new statutory code of conduct, so that “consumers will be given more choice and control over how their data is used, and small businesses will be able to better promote their products online.”
“Under the new code, platforms including those funded by digital advertising could be required to be more transparent about the services they provide and how they are using consumers’ data, give consumers a choice over whether to receive personalised advertising, and prevented from placing restrictions on their customers that make it hard for them to use rival platforms,” said the government.
And the government warned that the new unit could be given powers to suspend, block and reverse decisions of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance.
“Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives – whether it’s helping us stay in touch with our loved ones, share creative content or access the latest news,” said Business Secretary Alok Sharma.
“But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers,” said Sharma. “Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out.”
The government was keen to stress that it was not targetting technology firms such as Google and Facebook, but tighter regulation was needed.
Indeed, the government pointed out that the digital sector contributed nearly £150 billion to the UK economy in 2018.
“I’m unashamedly pro-tech and the services of digital platforms are positively transforming the economy – bringing huge benefits to businesses, consumers and society,” said Digital Secretary Oliver Dowden.
“Today’s proposals could also help give small businesses fair access to platform services including digital advertising, allowing them to grow their business’ online presence,” said Dowden. “The code could be used to ensure platforms are not applying unfair terms, conditions or policies to certain business customers, including news publishers.”
The government said that at the moment, “dominant online platforms can impose terms on news publishers that limit their ability to monetise their content – severely impacting their ability to thrive.”
The new code will govern commercial arrangements between publishers and platforms to help keep publishers in business – helping enhance the sustainability of high-quality online journalism and news publishing in the UK.
“It will form a major part of the government’s work to support the sustainability of the UK’s world leading news publishing sector and make sure, as news moves ever more online, publishers get a fair deal from the platforms on which they rely,” said the government.
Currently the CMA feels that there is a lack of competition in digital markets that prevents the development of new, valuable services for consumers, and results in higher prices for businesses using the platforms – which are then passed on to consumers.
Earlier this week, EU digital chief Thierry Breton publicly warned tech giants of the consequences of breaking the forthcoming European Union’s Digital Services Act (DSA) and Digital Markets Act (DMA) rules.
Breton warned that tech giants that if they break the new EU rules, they could face fines, be ordered to change their practices, or even be forced to break up their European businesses.