Tech giants such as Facebook or Google will be forced to contend with a new government authority aimed at improving competition.
Earlier this year, the CMA urged the government to give it greater scope to tackle tech giants’ marketplace dominance and called on Downing Street to support the establishment of a new regulatory body.
Announced today, the new Digital Markets Unit, led by the Competition and Markets Authority (CMA), will work alongside regulators such as Ofcom or the Information Commissioner’s Office to enforce a new code of conduct for digital platforms.
Due to begin work in April, the Digital Markets Unit could be given powers to suspend, block and reverse the decisions of tech giants and order them to take certain actions to achieve compliance with the code.
Companies could also face financial penalties for non-compliance, the CMA revealed.
Digital Secretary Oliver Dowden said that while digital platforms are ‘positively transforming’ Britain’s economy and bringing huge benefits to consumers and businesses, there are growing concerns over their increased market dominance.
“There is growing consensus in the UK and abroad that the concentration of power among a small number of tech companies is curtailing growth of the sector, reducing innovation and having negative impacts on the people and businesses that rely on them,” he said.
Dowden said the new proposals will help give small businesses “fair access” to platform services, such as digital advertising and enable them to grow their online presence.
Through the new guidelines, platforms such as Google will be forced to ensure they are not applying unfair terms, conditions or policies to specific business customers, the Digital Secretary revealed.
Business Secretary Alok Sharma echoed Dowden’s comments, adding that the dominance of a select few companies has led to higher advertising prices as well as less choice and control for British consumers.
“Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out,” he said.
CMA Chief Executive Andrea Coscelli said the new regulatory body will play a key role in tackling market dominance.
“We welcome the government’s response to the findings of our digital advertising market study,” he said.
“Only through a new pro-competition regulatory regime can we tackle the market power of tech giants like Facebook and Google and ensure that businesses and consumers are protected.”
The new code will set ‘clear expectations’ for companies that command significant market presence over what is deemed to be acceptable and fair behaviour when interacting with users or competitors.
This means that, under the new code, platforms including those funded by digital advertising will be required to be more transparent about services which they provide, as well as how they gather, store and process consumer data.
Similarly, platforms will be forced to provide a greater variety of choice over whether consumers receive personalised advertising. They will also be prevented from placing restrictions on customers to prevent them using rival platforms.
Currently, dominant online platforms, can impose terms on news publishers that limit their ability to monetise their content – severely impacting their ability to thrive.
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Both Facebook and Google have clashed with Australian regulators recently over this exact issue.
Australian lawmakers argue that both companies have been stifling original news content on their respective platforms. In response, the Australian Competition and Consumer Commission (ACCC) announced new legislation, titled the News Media Bargaining Code which forces tech giants to pay smaller publishers for content circulated on their platforms.
UK legislation appears to mimic actions taken by Australian regulators to combat the issue.
The now code will govern commercial arrangements between publishers and platforms – with an eye on supporting the publishers. The government said these new measures will help sustain online journalism and news publishing in the UK.