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UK launches new watchdog to reign in Big Tech, bring about ‘pro-competition’ regime

The United Kingdom has launched the Digital Markets Unit (DMU), a part of its competition regulator, the government announced on Wednesday. The DMU will be responsible for reigning Big Tech companies such as Google and Facebook. The government, in a statement said, the “pro-competition” regime will help curb the dominance of tech giants in the UK.

The DMU’s imminent formation was announced in November 2020. It was supposed to enforce a new code of conduct to ensure “acceptable behaviour” by tech giants, with a focus consumer data safety and portability between platforms, among other things. At the time, the government had said the DMU could also be given powers to suspend, block and reverse decisions of tech giants in order for them to comply with the code.

While the government is yet to pass a law to give the DMU statutory status — which will be done this year —, it has asked to get started in a “shadow non-statutory form”. “The DMU […] will oversee plans to oversee plans to give consumers more choice and control over their data, promote online competition and crack down on unfair practices which can often leave businesses and consumers with less choice and more expensive goods and services,” the Wednesday announcement read.

  • Codes of conduct for platforms: The DMU has been asked to look into how codes of conduct could be used to govern the relationship between digital platforms and groups such as small businesses, which rely on the former to advertise and reach their customers. “[The DMU] will take a sector neutral approach in examining the role of platforms across a range of digital markets, with a view of promoting competition.”
  • Relationship with news publishers: The government has also asked the DMU to look into a code that would govern the relationship between platforms and news publishers, “to ensure they are as fair and reasonable as possible”. This code would presumably look into revenue sharing agreements between publishers and platforms such as Google and Facebook, something Australia has done with its News Media Bargaining Code; a similar discussion has begun in India as well, with the subject being raised in Parliament last month.

Digital secretary Oliver Dowden said in a statement that the launch of the DMU would pave way for the development was good for consumers, and would support the news industry, “which is vital to freedom of expression and our democratic values”. Business secretary Kwasi Kwarteng said, “Our new, unashamedly pro-competition regime will help to curb the dominance of tech giants, unleash a wave of innovation throughout the market and ensure smaller firms aren’t pushed out.”

The UK said it would hold meeting with tech and digital ministers of the G7 grouping on the matter of digital competition this month to build consensus and coordination. “As countries around the world grapple with these issues, the unit will coordinate with international partners so the UK remains a global leader in shaping the debate in this area.”

Dominance of Google, Facebook under scrutiny

The core focus of the DMU’s work will likely be driven by the findings of a report by the UK’s competition regulator, the Competition and Markets Authority (CMA), from July 2020. The CMA had found that Google has significant market power in the general search and search advertising markets, while Facebook has significant market power in the social media and display advertising markets. Both companies accounted for 80% of all spending on digital advertising in 2019 in the UK. It found evidence of a lack of competition in these markets, leading to reduced innovation, reduced quality and lack of consumer control.

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