Britain will impose bespoke rules on Facebook, Google and other technology giants if they fail to comply with its anti-competitive rules, and punish them by issuing them with a bespoke code of conduct, under plans unveiled by the Competition and Markets Authority that would proactively shape companies’ behaviour, it has been claimed. The CMA intends to create a digital market unit within itself to set the rules and ensure compliance, but the regulator wants the new entity to be able to impose its own rules on technology companies if they fail to comply with the remedies required by anti-competitive behaviour regulators.
According to a report in the Financial Times, it would be worth more than $7 billion based on Facebook’s latest annual results.
The new unit is due to be operational in April but will only be given the powers it needs if MPs agree to what they believe could not happen until 2022. In the meantime, technology-company lobbyists will probably try to limit its reach.
Experts doubt how much influence the unit will have over regulators in the European Commission and the US. The European Commission is now responsible for most large and complex competition cases involving the UK but not the UK.
The CMA will take on local responsibility from 1 January after Brexit, but the latest announcement does not provide details. Last week, the organisation set out for the first time how it will regulate the technology platforms that currently dominate the online market and give consumers more control over how their data is used.
Large fines are possible, but the authority hopes most cases will be resolved informally, not through a court.
This could mean, for example, approaching Google or another company to discuss and ensure the new rules. CMA chief Andrea Coscelli said Britain needed new powers and a new approach. In short, we need a modern regulatory system that makes innovation successful by acting quickly to avoid problems, “he said. One industry observer welcomed the idea of addressing the problem upfront, not through market abuse.
He said: ‘It’s great that Facebook, Google and Amazon are regulated, but it’s equally ridiculous that we are now in a position where these companies can become so big that they need bespoke rules. He said the measures should have been introduced years ago and questioned how much influence Britain will have after leaving Europe.
TechUK, which represents hundreds of technology companies large and small, said: “It is important that the CMA continues its advice approach and ensures that decisions are fully informed by the facts and a deep understanding of the digital market. Other companies likely to be affected include Apple, Microsoft, Netflix and Airbnb. However, the Commission said that companies with a “recognised strategic market position” – i.e. significant and widespread market power – include Google, Facebook, Twitter, Amazon, Apple and Google’s parent Alphabet, as well as Microsoft and Amazon. Cma did not specify which technology giants would be at the center of the Digital Markets Unit’s efforts, but said they would.
The Government will consult on the plans before writing the necessary legislative changes. The announcement comes just days after the European Commission unveiled its own regulatory plans for the digital market. Originally, it was supposed to disclose the proposals now, but the EU regulator has now set 15 December as the deadline for consultations on its Digital Single Market Act, which it says will address “strangling business opportunities for small businesses.”