UK Markets close in 5 hrs 35 mins

Britain could launch 'competition unit' to challenge tech giants like Google and Facebook

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A protester wearing a model head of Facebook CEO Mark Zuckerberg poses for media outside Portcullis House on November 27, 2018 in London, England. Photo: Jack Taylor/Getty Images

The UK government on Wednesday announced it is considering proposals to overhaul the UK’s competition laws and introduce a new unit to enforce competition to tech giants like Google (GOOGL) and Facebook (FB).

Chancellor Philip Hammond said in his spring statement he will ask the UK’s Competition and Markets Authority to review the digital marketing sector. He said it would be the “first step towards implementing reforms.”

Hammond’s comments were in response to a six-month review of competition in tech in the UK, conducted by Barack Obama’s economic advisor Jason Furman.

The report, commissioned by the Treasury and published on Wednesday, concluded that tech giants don’t face enough competition and have too much dominance.

READ MORE: ‘Confidence in our political leaders is almost gone’: Business chiefs’ anger at Brexit ‘circus’

“The UK population spent around 4bn hours online per month in 2018, of which more than 1.4bn hours were spent on Facebook and Google sites combined,” it said in its introduction.

Furman and his colleagues recommend overhauling competition laws and launching a new “digital markets unit” to help police competition and the use of customer data, and to make switching between services easier.

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,” Furman said in a statement. “Some say this is inevitable or even desirable. I think the UK can do better.”

Hammond said: “Competition is fundamental to ensuring the market works in the interest of consumers, but we know some tech giants are still accumulating too much power, preventing smaller businesses from entering the market.”

READ MORE: Chancellor unveils state of UK economy amid Brexit crisis

The reforms being considered follow plans announced last October by the government to launch a new digital sales tax, dubbed the “Facebook tax.” The tax targets “search engines, social media platforms and online marketplaces” and will apply to companies with revenues of over £500m that are profitable in the UK.

Hammond said during Wednesday’s spring statement that the UK “will remain a great place to do digital business… but it will be a place where successful global tech giants pay their fair share.”

The Chancellor also announced that PhD-level jobs will be eliminated completely from visa caps as part of a push to stimulate research and development in the UK.