The UK launched a tough new regulator on Wednesday, which it says will help make sure tech giants such as Facebook and Google cannot exploit their market dominance to crowd out competition and stifle innovation online.
The Digital Markets Unit (DMU), based within the UK’s 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.
The UK government says it has asked the new watchdog 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.
“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 UK 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,” he said.
The minister has asked the DMU to work with the country’s communications regulator, Office of Communications (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.
“This is a significant step towards our goal of improving consumer choice and delivering better services at lower prices,” said UK 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,” he said.
The government acknowledged that online platforms bring huge benefits for businesses and society and 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 UK government announced plans for the DMU 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.
Andrea Coscelli, Chief Executive of the CMA, said: “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.
“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 says it will consult on the design of the new pro-competition regime this year 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.
Alongside, 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, a government statement said.
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.