Yahoo Finance UK competition regulator wants to 'shape the behaviour' of tech giants
The Competition and Markets Authority (CMA) said today it has issued advice to the UK government on a new regime for digital markets, which will “proactively shape the behaviour of the most powerful tech firms” including Google (GOOGL) and Facebook (FB).
The advice “outlines a modern regulatory regime fit for the digital age – one that is forward-looking, targeted and enables quick results to harness the full potential of digital markets, driving greater competition and innovation,” the CMA said in a statement.
Its aim is to ensure consumers and businesses are treated fairly and help to level the playing field for smaller rival tech firms.
CMA CEO Andrea Coscelli said that in order to “ensure the UK can continue to enjoy a thriving tech sector, consumers and businesses who rely on tech giants like Google and Facebook should be treated fairly, and competitors should face a level playing field.”
He explained that in order for this to happen, the UK needs “new powers and a new approach.”
If implemented, the new regime will govern the most powerful tech firms – those with “strategic market status” (SMS) – meaning those with “substantial, entrenched market power.”
The proposals include a new, legally binding code of conduct, tailored to each firm.
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This code will help to “shape the behaviour of powerful digital firms, up front, and govern elements of how they do business with other companies and treat their users,” the CMA said.
The second proposal is “pro-competitive interventions.” An example of such an intervention could be imposing interoperability requirements on tech firms and helping consumers to control and share data.
The third proposal is enhanced merger rules, which would enable the CMA to apply “closer scrutiny” to transactions involving SMS firms.
The CMA said last week that a dedicated Digital Markets Unit would be set up to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market.
The intention is for the unit to become operational in April, but it will only gain the powers it needs if MPs vote to grant them, and that could take as long as 2022.
Rocio Concha, director of policy and advocacy at consumer group Which?, said: “It is vital that the new Digital Markets Unit is fully up and running as soon as possible - and that the government resists any calls to water down the powers it needs to promote innovation and challenge the tech giants when their dominance harms consumers.
“We’ve seen how a lack of competition has stifled innovation in the tech sector and given a few companies a stranglehold over the market - leading to higher prices, reduced choice and consumers giving up more data than they would like,” she added.
Last week the CMA published guidance on how it will conduct its work following the end of the transition period for the UK’s exit from the EU at the end of the year.
As of 1 January 2021, the regulator will take on responsibility for merger, cartel and competition enforcement cases that were previously reserved to the European Commission. These are typically the larger and more complex cases.
Earlier, the CMA had said it will take a complaint against Google, related to its market study into online platforms and the digital advertising market, “very seriously” and may open a formal investigation under the Competition Act.
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