UK Big Tech Regulator ‘Will Bring Change, Reduce Killers’

UK Big Tech Regulator ‘Will Bring Change, Reduce Killers’

Just over a year after the launch of the Digital Competitiveness Unit at the National Competition Control Organisation, the UK government has prepared a number of cured meats to focus on with this new Big Tech regulator. , including confirmation that you will be given the option to impose fines. Up to 10% of global annual revenue if platform giants fail to adhere to modified codes of conduct.

However, the government has yet to confirm when it expects the legislation to strengthen the Digital Markets Unit (DMU) and has only said it is introducing legislation to give it a legal basis “in due course”.

In response to a question about the “friendly competition for digital markets” that began last year, the Department of Digital, Culture, Media and Sports (DCMS) said yesterday that Big Tech’s “fair play” rules are in the hands of the government. to be. wants to make digital markets more open and competitive: make it easier for UK users to switch between Android and iOS; Without losing your data between social media accounts; And have more control over your data (for example, opt out of “targeted” ads).

The DCMS also wants the regime to give smartphone users more choice about which search engine and messaging apps to use, so it looks like the DMU is ready to resort to the preloading/packaging practices of giants like Apple and Google.

Increasing competition by approving platform giants to behave fairly with enterprise customers is another core goal of the reform, in which the DCMS outlines how it will support small businesses and startups.

“Tens of thousands of small and medium-sized businesses in the UK will get better deals from the big tech companies they trust for online commerce. “Tech companies may need to warn small businesses about changes to their algorithms that drive traffic and revenue,” the DCMS press release said, citing an example of a change to a search engine’s algorithm that could affect the traffic of certain websites and businesses. mislead. This has consequences for your income. (Something many Google competitors have complained about over the years.)

Commenting on the statement, digital minister Chris Philp said:

“Technology has revolutionized the operations of thousands of businesses in the UK, helping them reach new customers and make a range of instant online services available to the public. But the dominance of several tech giants hinders competition and stifles innovation.

“We want to level the playing field and equip this new tech regulator with different powers to deliver lower prices, better choice and greater control for consumers, while supporting content creators, innovators and publishers, including our news industry.

The DCMS also said the measures received “ensure that news publishers can monetize their online news content and be fairly remunerated,” and said the DMU would have the right to “intervene between the price dispute resolution tools” in communications and platforms. . , suggests the government is taking inspiration from the Australian News Trade Code, which targets Facebook and Google.

App developers will also be able to sell their apps on “fairer and more transparent terms,” ​​according to the DCMS.

In that case, the government will likely take a series of international steps to force Apple and Google to relinquish complete control over App Store rules. (However, the devil is in the details of the codes of conduct the DMU will use, and we will have to wait an unknown amount of time to see them, as the DCMS confirms: “Government determines digital activities and behaviors.

According to the DCMS, only “a small number of companies with significant and strong market power in the UK” will be defined as strategic market status and therefore fall within the scope of the scheme. “This ensures that the regime holds the most powerful companies accountable for their behavior,” he said.

“DMU will have an arsenal of severe sanctions to address non-compliance, including fines of up to 10% of global annual revenue and additional fines of up to 5% of global daily revenue for each day of violation,” he added. It also clarifies that the entity “may suspend, block and amend the conduct of companies that do not comply with its conduct requirements, and instruct them to take the special measures necessary to remedy the violation”.

“Top executives will face civil penalties if their companies fail to properly handle requests for information,” the DCMS said.

Another measure would be to force tech giants within the scope of the scheme (ie those with “sufficient and established market power in the UK”) to notify the acquisition before the CMA completes its order. That the regulator could make an initial assessment of the merger “to determine whether further investigation is necessary”.

Last fall, the CMA ordered Facebook/Meta to approve the (completed) acquisition of Giphy, based on existing competition rules and powers to intervene. But going forward, the goal for the DMU is to proactively prevent a meta-type giant from buying a small competitor if it identifies a major competitor related to the proposed merger.

It appears that this provision is intended to severely restrict the ability of large tech companies to buy and close/assimilate/strangle smaller competitors, so-called “killers” who are considered terrifying by consumers and competition (although some venture capitalists might be happy to get).

Commenting on the DCMS DMU statement, Andrea Koscelli, CEO of CMA, said:

“The CMA welcomes these proposals and we are delighted that the Government has made our recommendations, enabling the DMU to oversee a strong and efficient digital market regime in the UK.

“CMA stands ready to help the government enact legislation as quickly as possible so that consumers and businesses can benefit.

The UK is lagging behind Europe

The DMU began working behind the scenes in April last year ahead of an expected overhaul of tech giants’ “competition” oversight that the government said it will introduce to the most powerful platforms, known as the “strategic market”. to regulate. † Status “after similar moves in other parts of Europe.

Germany is leading the way here, naming (this year) Google and Facebook/Meta as their reformed competition mode for the most powerful tech giants since it renewed the law in early 2021, meaning the Federal Bureau of Cartels has been called in. † Act faster to solve domain problems in the Big Tech market.

In March, EU legislators also agreed on the final details of the proposed ex-ante arrangement until the end of 2020, which will apply to the whole bloc and use a series of initial operational commitments under the incoming pan-European law. As internet gateways fines for non-compliance up to 10% of global annual revenue.

The EU’s ex-ante regulation, called the Digital Market Act (DMA), will come into effect next spring.

This means that the UK is already lagging behind in addressing major structural competition problems in the digital market, issues that its competition authority, the Competition and Markets Authority (CMA), has in some cases examined over the years (such as the digital marketing market, so broken it needs new powers to regulate the ad-tech giants; also, more recently, it has raised preliminary concerns about the duopoly of Apple and Google’s mobile app store).

And while the DMU is technically up and running, it still lacks the power to stop overly powerful tech giants, which is why UK consumers and businesses continue to binge on unfair terms and conditions.

It’s also unclear how far behind the UK is.

In recent weeks, reports have suggested the government is abandoning a plan to more actively regulate the tech giants. Although the DCMS said the ministers remain committed to the reform, only without specifying when the government will implement it specifically.

Delayed reforms will not solve anything in the short or medium term if we look at the usual regimes for procedural purposes and so on. And with Big Tech’s market power so ingrained, any disruption seems costly to UK consumers and competition: they’re already losing.