New digital regulator vows be 'tough' on US tech giants

The UK has officially launched the Digital Markets Unit, which ministers boast will be a “tough new regulator” to clamp down on tech giants such as Facebook and Google to ensure they cannot exploit their market dominance to crowd out competition and stifle innovation online.

The DMU, based in the Competition & 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 many claim can often leave businesses and consumers with less choice and more expensive goods and services.

The move follows last month’s publication of the key priorities of the Digital Regulation Cooperation Forum (DRCF), which was first formed July 2020. It brings together the Information Commissioner’s Office (ICO), the Office of Communications (Ofcom), and the Competition & Markets Authority (CMA) and the Financial Conduct Authority (FCA). It marks what is claimed to be a “step-change” in regulation across digital and online services.

Like the DRCF, the DMU launch is in response to widespread concerns 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 Government announced the unit would be set up 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.

The Government has asked it 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. It will take a sector neutral approach in examining the role of platforms across a range of digital markets, with a view to promoting competition.

Digital Secretary Oliver Dowden has briefed the DMU to work with Ofcom to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers, as part of plans to ensure they are as fair and reasonable as possible.

This would pave the way for the future legislation and is alongside the wider work being done by the Government, following the Cairncross Review and the package of support through the pandemic, to boost the sustainability of the press.

Dowden said: “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.

“The DMU 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.”

CMA chief executive Andrea Coscelli added: “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 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.

The Government has also today published an outline of the DMU’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.

The DMU will work closely with important regulators including the Information Commissioner’s Office, Ofcom and the Financial Conduct Authority so that consumers and businesses are comprehensively protected and the new regime is coherent and effective.

It will be led by Will Hayter, who takes over following his work at the Cabinet Office supporting the UK’s transition out of the EU.