New UK legislation to tackle ‘excessive dominance’ of Big Tech
The UK Government is tabling legislating this week to tackle the “excessive dominance” of a small number of tech giants and promote competition.
Under the provisions of the Digital Markets, Competition and Consumers bill, a new regulator (set up under the existing Competition and Markets Authority) will ensure the compliance of tech firms defined as having “Strategic Market Status.” This will include companies who either generate over £25bn in global turnover, or £1bn in the UK.
Tech companies falling under the regulator’s remit will have to comply with firm specific conduct requirements developed by the regulator guided by the principles of “fair trading”, “open choices” and “trust and transparency.”
As an example of ensuring fair competition, the regulator could force Apple to allow iPhone users to downloads apps from alternative apps stores.
The regulator will have the power to impose financial penalties of up to 10% of global turnover for breaches of the regulatory framework, as well imposing daily fines up to 5% of global turnover for every day breaches continue.
Additionally, the regulator can impose smaller fines of 1% of global turnover for non-compliance with information requests or giving misleading information, with a 5% daily fine on top.
Firms with Strategic Market Status may appeal the regulator’s interventions, but only on a judicial review basis rather than on the full merits of the judgement, and the regulator will be able to issue fines without seeking a court judgement.
The bill also seeks to protect consumers from fake reviews and subscription traps. The current wording of the bill would make it illegal for companies to commission or post fake reviews without verifying they are legitimate.
The new rules will similarly force companies to remind customers when a free trial or offer period is elapsing, and present that they can end their subscription in a “straightforward, cost-effective and timely way.”
While the CMA previously had to acquire a court order to prove rule breaches, the new bill will remove this requirement. Here, too, the regulator will be able to impose fines of up to 10% of global turnover and 5% for each day of ongoing breaches.
The CMA has welcomed the bill, which it said “has the potential to be a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy.”
News Media Association chief executive Owen Meredith also welcomed the bill, saying: “Given First Reading today, the Digital Markets, Competition and Consumer Bill is a hugely welcome step forward towards creating a fairer digital economy, delivering real benefit for consumers during a very challenging period. “
Meredith continued: “We hope the Bill makes rapid progress through Parliament, with cross-party support, so these important measures reach the statute book quickly and can start delivering benefits as soon as possible for consumers and businesses up and down the country.”
However, James Rosewell, co-founder of the digital competition advocacy group Movement for an Open Web (MOW) raised concerns about potential loopholes that risk allowing the tech giants to “behave with impunity in crushing their competitors using monopoly power.”
While saying the bill has the right objectives, Rosewell argued that certain clauses could give dominant tech firms a “get-out-of-jail free”.
One clause MOW took issue with is the countervailing benefits exemption (Section 29) which can see the actions of firms excluded from regulations if they are deemed to be in the consumer benefit.
In a statement, MOW said: “The very dominance of the platforms means that they can ‘prove’ consumer benefits even when their actions will harm competitors and small businesses.
“The platforms have large and expert legal teams with a lot of experience and success in circumventing legislation through the use of this type of loophole. This approach will effectively create a looser and less strict regime than under the current system, which is clearly not the goal of the legislation.”