UK will push ahead with reforms long anticipated to counter Big Tech’s power
The UK has indicated that it will push ahead with a ex ante reform of competition aimed at countering the market power of Big Tech.
The legislation will also target fake reviews and subscribing traps to help consumers avoid being trapped in unwanted contracts and shopping online.
Former PM Boris Johnson threw a ball into the grass, but now, Prime Minister Rishi Sunak is trying to retrieve it. just over a year agoIn favor of delay and hesitation, he avoided pressing forward with the ex ante digital reform that had been long anticipated.
Today, Ministers at the Department for Business and Trade and Department for Science, Innovation and Technology announced The Digital Markets Unit will now be empowered to oversee the platforms that are considered to have a so-called strategic status market (SMS).
Kevin Hollinrake commented in a written statement:
Consumers deserve better. From tech giants abusing their power to scams, rip-offs and fake reviews like getting caught in a subscribing trap, consumers deserve more. The new laws we’re delivering today will empower the CMA to directly enforce consumer law, strengthen competition in digital markets and ensure that people across the country keep hold of their hard-earned cash.
The DMU is a shadow operation at the Competition and Markets Authority. over two years Ex ante, legislators in Europe have begun to implement their own reforms in anticipation of the needed enforcement powers.
Germany has, for instance, updated its domestic regime in 2021, and is currently conducting multiple investigations, including those against Amazon, Apple, Google, and Meta. some wins It is a good idea to get a hold of someone else. can point to.
European Union lawmakers have also reached an agreement on the Digital Markets Act last year The proactive surveillance regime is set to take effect on Internet gatekeepers in the future this year.
The UK has to catch up with its regional counterparts.
The CMA has had to deal with some complications as it appeared that they expected the DMU to be empowered sooner. This was the reason for their initial decision to not act on several issues. concerns raised in a preliminary market study Apple and Google have a mobile duopoly. Although it took enforcement action with respect to Google Play Billing at that timeThen, you can say that led to a settlement offer by the tech giant The CMA has now begun consulting on this issue.
When it later sought to reverse the decision to delay new powers, the regulator tried to push forward with an investigation Apple’s mobile browser and cloud gaming services. However, earlier this monthApple won its appeal against the delay of opening an investigation, citing a breach in standard legislative protocol.
The overarching issue driving the need for ex ante competition reform is classic competition powers are perceived to be too slow and reactive to respond effectively to market power in the digital sphere, which benefits from powerful concentration dynamics like network effects — leaving consumers and startups at the risk of unfair T&Cs.
The legislation aims to reduce the time taken for competition intervention, by giving the CMA the ability to enforce consumer laws directly rather than going through long court processes.
Penalties for violating consumer law will also be stepped up — they can amount to as much as 10% of global sales.
The UK is taking a different approach than the EU to ex ante reform of competition. The UK government wants the DMU, instead of creating a list of ‘do’s and don’ts’ that are set in law and apply to all platforms in scope, to create bespoke conditions for each tech giant. This will allow the government to ensure the oversight is proportionate and there is no risk of excessive regulation.
“The bill establishes an entirely new regime for the digital age. It is overseen and supervised by the [DMU] in the CMA – that will use a proportionate approach to hold digital firms accountable for their actions – enabling all innovating businesses to compete fairly,” said the CMA in a press release. “It will establish rules to prevent firms with Strategic Market Status [SMS] from using their size and power to limit digital innovation or market access – ensuring the UK remains a highly attractive place to invest and do business for all.”
Sarah Cardell, CEO of the company, said:
This flagship bill gives the CMA more powers to protect consumers, businesses and to support the economy. This bill has the potential to mark a major change in how the CMA protects consumers in the UK, and in the way it ensures digital markets support the UK economy by supporting growth, investment, and innovation.
People expect fair and open markets to provide the best possible deal, but also to have rules in place that protect them if things go awry. Proposals to give the CMA stronger enforcement powers when firms break consumer law – including the ability to directly impose fines for the first time – are crucial to ensure we can continue cracking down on rip-offs and underhand deals, helping to deter firms from taking advantage of people.
Digital markets can be a boon for businesses, but only when they are able to compete and succeed. This bill is an appropriate legal framework for the digital age. It will set up a tailored, proportionate and evidence-based regulatory approach for the largest and most powerful firms in digital to ensure a competitive environment that is beneficial to all.
We are ready to support this bill through the legislative process. Once it is approved by Parliament, we will be ready to utilize these new powers.
Coadec’s exec director Dom Hallas, who is also the head of its startup advocacy group Coadec welcomed the news. He warned of “incumbents blocking the path for startups in broken markets.”The Digital Markets Unit is a powerful instrument that can help innovative companies succeed,” he said.
The government has said that the bill will prohibit the practice of advertising fake consumer reviews and facilitating fake customer reviews without reasonable steps being taken to verify their authenticity.
Subscriptions that use dark patterns and other tactics to lock consumers into contracts will be governed by new rules that ensure users are able “to exit such contracts in a straightforward and cost-effective manner.” For example, businesses must send out a notice when an introductory or free trial is ending.
“This will help deliver one of the Government’s five priorities to grow the economy by increasing consumer choice and confidence in the products they buy and services they use,” it added.
Sunak’s Government is likely to be focused on the short time they have left to impress the British public, before the general election (which must take place at the latest in January 2025) must be called.
In public comments, the government stated that the new measures would be implemented “as quickly as possible” after parliamentary approval. The ministers do note that secondary legislation may also be required and that guidance could be published. This means there is a longer time before the GAFAM companies are forced to alter their business practices in the UK.