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UK to set up new Big Tech regulator to address Google, Facebook dominance

The United Kingdom (UK) government will set up a new body exclusively for the purpose of regulating Big Tech companies. The country’s competition regulator Competition and Markets Authority’s (CMA) new dedicated Digital Markets Unit (DMU) will enforce a new statutory code to ensure “acceptable behaviour” by technology companies such as Google and Facebook. It will begin operating from April 2021.

The new code, the UK government claims, will support the sustainability of the news publishing industry, “helping to rebalance the relationship between publishers and online platforms”.

The government noted that online platforms bring huge benefits for businesses and society. However, it also pointed to the growing consensus in the UK and abroad to the “concentration of power amongst a small number of tech companies”. This concentration has led to reduced innovation and potential negative impacts on people and businesses, it said.

“But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers […] Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out” — Alok Sharma, Business Secretary, United Kingdom

Code will set ‘clear expectations’ for platforms

The new code, enforced by the Digital Markets Unit (DMU), will set “clear expectations” for platforms that have considerable market power, over what represents acceptable behaviour when interacting with competitors and users.

  • Transparency on use of consumer data: Platforms, including those funded by digital advertising, will have to be more transparent about the services they provide and how they use user data. The idea is that consumers should be able to prevent being targeted with personalised advertising.
  • Ease to use rival platforms: The code also aims to make prevent platforms from placing restrictions on their customers that make it difficult for them to use rival products from other platforms.
  • Govern arrangement between publishers, platforms: The government noted the advantage that online platforms possess have over new publishers. It said platforms can impose terms on publishers which can limit the latter’s ability to monetise their content, “severely impacting their ability to thrive”. The new code, it said, will govern the commercial arrangements between the two parties so as to help publishers remain in business. The government essentially wants to help publishers “get a fair deal” from the platforms. This is remarkably similar to what the Australian competition regulator is doing with Facebook and Google in that country.

The statement said the DMU could be given powers to suspend, block and reverse decisions of tech giants, order them to comply with the code and even impose financial penalties for non-compliance.

CMA report had found Google, Facebook dominance

The decision to establish the DMU is a result of a market study undertaken by by the CMA. The report, published in July this year, had found that Google has significant market power in the general search market and in “search” advertising. On the other hand, Facebook was found to have significant market power in the social media market and in “display” advertising.

The CMA had expressed concerns that Facebook and Google have developed into such large companies, with “unassailable market positions”, that rivals and new-entrants could no longer compete with them on equal terms:

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  • Both companies were indispensable for users due to their size. Facebook is essential for people to remain in contact with each other, while Google has the advantage of access to huge amounts of data to train its search algorithm.
  • Both companies have a wide international presence, and small companies find it hard to compete with that scale.
  • Google and Facebook’s market position has had impact on newspapers and other publishers. The CMA found that newspapers were reliant on the two companies for 40% of visits to their sites, thereby causing a drop in advertising revenues for the publishers.

Earlier to the publication of this report, CMA had constituted a Digital Markets Taskforce to provide a proposal for a new anti-competition regulatory regime, by the end of the year. The UK government will enact legislation based on these recommendations, the statement said. The DMU, in turn, will be informed by the Taskforce’s work.

Global antitrust scrutiny on Big Tech

Multiple countries have taken steps to address the colossal size, impact and influence of Big Tech companies such as Google, Facebook, Apple, Amazon and Microsoft. Last month, the United States’ government launched a major lawsuit against Google for using anti-competitive tactics to maintain and extend its monopoly in the search engine and digital advertising market. The US Department of Justice suggested breaking up the company to foster competition in the market.

Both Google and Facebook are currently at arms with the Australian government over a News Media Bargaining Code which is supposed to help news publishers strike an equitable revenue sharing deal with the companies. Google recently dropped a curated news product after calling the Code “unworkable“.

The European Union is currently deliberating the Digital Services Act (DSA), which has several anti-competition provisions to put a check on Big Tech in the areas of data sharing, digital marketplaces and so on. Japan, too, has expressed intentions to team up with EU and the US to coordinate on antitrust regulation.

Meanwhile, India has also trained its eyes on Google. The Competition Commission of India (CCI) has opened several probes into the company’s products, the latest being one into its Play Store and Google Pay services. Other probes include one for Google’s alleged abuse of dominance in the smartphone market, and another over its dominance in the smart TV market.

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