Major tech firms should be forced to open up their customer data to competitors in “open banking”-style reforms which would loosen their vice-like grip on the digital market and give smaller rivals at least a fighting chance.
That is one of the key conclusions of yet another Government-commissioned report into the dominance of the likes of Facebook, Amazon and Google – the second this week alone – which claims that the lack of competition is harming consumers.
Former Barack Obama economic adviser Jason Furman, now a Harvard Professor, was commissioned by the Treasury last year to lead a six-month investigation into competition in the digital market.
The report says there needs to be quicker and simpler enforcement when a company uses “bullying tactics”, abusing its dominant position by giving preferential treatment to companies it owns, or driving out competitors with predatory pricing.
The review states: “Over the last 10 years the five largest firms have made over 400 acquisitions globally. None has been blocked and very few have had conditions attached to approval, in the UK or elsewhere, or even been scrutinised by competition authorities.
“Ensuring that competition is vibrant requires ensuring that there are competitors. Merger control has long had this role and in the context of the digital economy it needs to become more active with an approach that is more forward-looking and more focused on innovation and the overall economic impact of mergers.”
The review recommends that a new digital markets unit should be set up in Whitehall, staffed by people with technological expertise and equipped with the powers to set and enforce greater competition.
It also says that consumers should be given more control over their personal data to enable them to switch between platforms more easily, and the largest companies should be forced to open up to smaller firms through providing access to key data sets, when doing so does not affect privacy.
By opening up the market, the Government hopes the trigger the launch of new services that could transform the use of digital apps and programmes. For example, an aggregator service could bring together a consumer’s content and data from several social media platforms and make it easier to browse and message friends and family who use different apps.
Customers could also be able to switch services more easily, taking their custom elsewhere and with greater control over their data. Lists of friends could be transferred to new social media sites and search histories could be transferred to a new search engine.
The review also calls on the Competition & Markets Authority (CMA) to launch a formal market study into the digital advertising sector, which is dominated by Facebook and Google and suffers from a lack of transparency. However, this has already been ordered by Culture Secretary Jeremy Wright following the publication of the Cairncross Review last month.
Professor Furman said: “The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation. Some say this is inevitable or even desirable. I think the UK can do better.
“My panel is outlining a balanced proposal to give people more control over their data, give small businesses more of a chance to enter and thrive, and create more predictability for the large digital companies. These recommendations will deliver an economic boost driven by UK tech start-ups and innovation that will give consumers greater choice and protection.”
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