Gov sets out new digital markets powers

The Government has set out plans for a new regime aimed at driving up competition between digital firms including the BigTech giants and protecting consumers.

The Digital Markets Unit (DMU) will be given the power to designate tech firms that hold substantial and entrenched market power with ‘Strategic Market Status’ (SMS).

The Government said this will require companies to follow new rules of acceptable behaviour with competitors and customers in a move that will benefit the public and drive growth and innovation across the economy.

New powers proposed for the watchdog include the ability to suspend, block and reverse decisions taken by tech giants and issue fines of up to 10 per cent of turnover for the most serious breaches.

The DMU, launched in non-statutory form within the Competition and Markets Authority (CMA) in April, will work alongside firms to inject stronger competition into the digital tech sector resulting in more innovation and fairer terms for UK businesses, including startups, news publishers and advertisers.

It will bring better consumer choice and control, making it easier for people to take their business elsewhere, the Government said.

The proposed new powers are expected to help British startups and scaleups to compete more fairly against tech giants that have powerful positions in the market.

A consultation on the move seeks views on the objectives and powers of the DMU and details a new mandatory code of conduct, which will set out what is expected of firms for fair trading, open choices and trust and transparency.

This could include tech platforms not pushing their customers into using default or mandatory associated services, or ensuring third party companies that depend on them aren’t blocked from doing business with competitors.

The DMU could also be given powers to suspend, block and reverse code-breaching behaviour by tech giants - for instance unfair changes in their algorithms or terms and conditions - and order them to take specific actions to comply with the code.

As well as tackling poor behaviour by these firms, the consultation will also consider whether the DMU will be able to impose a set of measures to tackle the root causes of competition issues in digital markets.

This could see the DMU implementing measures to support interoperability - making it easier for digital platforms and services to be compatible with each other and for customers to switch between them.

For example it could require platforms to allow the public to share contacts from one platform to another, the government suggested.

Commenting on the move, digital secretary Oliver Dowden, said: “The UK’s tech scene is thriving but we need to make sure British firms have a level playing field with the tech giants, and that the public gets the best services at fair prices.

“So we will be giving our new Digital Markets Unit the powers it needs to champion competition and drive growth and innovation, with tough fines to make sure the biggest tech firms play by the rules.”

The government will also consider whether to give the CMA greater powers to scrutinise and intervene in harmful mergers involving firms with ‘Strategic Market Status’, for example by requiring these big tech firms to report on their takeovers.

The consultation comes after the government set out its plan earlier this month to make Britain a global leader in innovation-focused digital regulation.

Following the consultation, the government aims to legislate to give the DMU its new powers as soon as parliamentary time allows.

Chief executive at the CMA, Andrea Coscelli,said: “We welcome the Government’s proposals for the Digital Markets Unit, which build on the recommendations set out by our Digital Markets Taskforce last year.

“These proposals recognise the importance of promoting competition in digital markets and the need for a new set of tools to do this most effectively.”

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