Govt reveals war plan to fight big tech but is it too late?

The UK Government is ratcheting up the rhetoric against the big tech giants, with new proposals to increase competition in UK digital economy as well as new powers to suspend, block and reverse decisions by tech giants, and issue fines of up to 10% of turnover for serious breaches.

Ultimately, the proposals are designed to usher in a new pro-competition regime for digital markets that will support the UK’s growing tech sector and protect consumers.

The main thrust is that the Digital Markets Unit (DMU) will be given the power to designate tech firms that hold substantial and entrenched market power with ‘Strategic Market Status’ (SMS). This will require them to follow new rules of acceptable behaviour with competitors and customers in a move that it is claimed will benefit the public and drive growth and innovation across the economy.

The DMU sits in the Competition & Markets Authority (CMA) and works closely with other regulators, including Ofcom and the Information Commissioner’s Office.

Launched in non-statutory form in April, the DMU will also work alongside firms to inject stronger competition into the digital tech sector, with the aim of sparking more innovation and creating fairer terms for UK businesses, including startups, news publishers and advertisers. It is claimed the unit will bring better consumer choice and control, making it easier for people to take their business elsewhere.

The proposed new powers are also designed to help British startups and scaleups to compete more fairly against those tech giants that have powerful positions in the market.

The consultation seeks views on the objectives and powers of the DMU and details a new mandatory code of conduct, which will set out what is expected of firms for fair trading, open choices and trust and transparency.

This could include tech platforms not pushing their customers into using default or mandatory associated services, or ensuring third party companies that depend on them are not blocked from doing business with competitors.

The code will be underpinned by investigation and enforcement powers. These may include imposing fines of a maximum of 10% of a firm’s turnover for the most serious breaches.

The DMU could also be given powers to suspend, block and reverse code-breaching behaviour by tech giants – for instance unfair changes in their algorithms or T&Cs – and order them to take specific actions to comply with the code.

As well as tackling poor behaviour by these firms, the consultation will also consider whether the DMU will be able to impose a set of measures to tackle the root causes of competition issues in digital markets.

This could see the DMU implementing measures to support interoperability – making it easier for digital platforms and services to be compatible with each other and for customers to switch between them. For example, it could require platforms to allow the public to share contacts from one platform to another.

Digital Secretary Oliver Dowden said: “The UK’s tech scene is thriving but we need to make sure British firms have a level playing field with the tech giants, and that the public gets the best services at fair prices.

“So we will be giving our new Digital Markets Unit the powers it needs to champion competition and drive growth and innovation, with tough fines to make sure the biggest tech firms play by the rules.”

Business Secretary Kwasi Kwarteng added: “Tech has transformed our lives for the better, whether it’s helping us to stay in touch with our loved ones, share content, or access the latest news.

“Nobody wants to see an unassailable monopoly and our common sense reforms will help protect consumers, support ground-breaking new ideas and level the playing field for businesses.”

Following the consultation, the Government aims to legislate to give the DMU its new powers as soon as parliamentary time allows.

However, some argue that it is all too little, too late as the likes of Facebook, Apple, Amazon, Google and Microsoft has already built dominant positions with virtually no intervention from the UK Government. The CMA has yet to prosecute any of them for stifling the digital market, while they have been able to gobble up rivals with impunity.

This is in sharp contrast to the French, for instance, whose competition authority last week slapped a €500m (£427m) fine on Google for riding roughshod over news organisations with the use of their content.

Only last month the same authority hit Google with a €220m (£189m) fine for abusing its advertising power after finding that Google’s ad management platform for large publishers, Google Ad Manager, favoured the company’s own online ad marketplace, Google AdX.

Meanwhile, the EU competition authority fined the company a record €4.34bn (£3.9bn) fine in 2018 for using its Android mobile operating system to block rivals. Google was also fined €1.49bn (£1.28bn) by the EU for blocking rival online search advertisers in 2019. That followed a €2.42bn fine in 2017 for hindering rivals of shopping comparison websites.

One industry source said: “The UK Government talks a good game but in many respects the damage has already been done. We will have to wait and see whether the DMU’s new powers will actually make any difference, but it has been a long time coming and I, for one, won’t be holding my breath.”