Big tech is in the spotlight yet again as the UK government has revealed its plans to tackle the “unprecedented concentration of power amongst a small number of digital firms”.
After plenty of feedback (105 written submissions were received), the government’s ‘A new pro-competition regime for digital markets’ consultation has concluded today (6 May).
It is monumentally long but the plans include targeted pro-competitive interventions (PCIs) and financial penalties.
The government explains: “The size and presence of ‘big’ digital firms is not inherently bad. Nonetheless, there is growing evidence that the particular features of some digital markets can cause them to ‘tip’ in favour of one or two incumbents.”
In a joint statement, Nadine Dorries, Secretary of State for Digital, Culture, Media & Sport, and Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, point out that the impact of weakened competition is “stark”.
The Competition and Markets Authority (CMA) estimates that Google and Facebook (now Meta) made excess UK profits of £2.4 billion in 2018 alone – “harming consumers through higher prices”.
The CMA has already duelled with those two big names. Meta was hit with a second fine in relation to its investigation into the acquisition of Giphy. While the regulator secured “legally binding” commitments from Google to address competition concerns over its Privacy Sandbox.
Anyway, there’s a lot of information from the consultation to digest, but to keep it brief there are some noteworthy points.
A Digital Markets Unit (DMU) within the CMA has already been set up. The consultation says this unit will be able to make targeted PCIs; and respondents in the consultation were “broadly” in favour of this to drive more competition and innovation.
PCI investigations will have a statutory deadline of nine months. But the DMU will be given the ability to extend the statutory deadline by three months in exceptional circumstances.
Potential punishments are also on the way as the DMU can impose financial penalties of up to 10% of a firm’s global turnover for regulatory breaches and to apply to the court to disqualify individuals from holding directorship roles in the UK. There can also be further daily penalties of up to 5% of daily worldwide turnover for continued breaches.
All of this is really targeted at the big names – a topic that has been rumbling on for some time in various countries. The government says it intends to adopt a minimum revenue threshold in legislation to make it clear which firms are out of scope of designation. That will be decided later.