The UK’s competition watchdog is to consider stopping technology giants from sharing user data between their apps and making it tougher for them to acquire smaller rivals.
In response to rising concern about the market power of Facebook and Google, the Competition and Markets Authority (CMA) highlighted that Silicon Valley organisations are harming competition “by creating barriers to new entrants”.
The regulator will assess how Facebook and Google accumulate and use personal data to make it easier to compete for digital advertising spend.
Germany’s competition authority decided to stop Facebook from combining data from WhatsApp, Instagram and Facebook earlier this year, and the CMA has also stated that there could be a case for “limiting the ability of platforms to share data across applications”.
In addition, fake online reviews will be examined as well as monitoring the conduct of price comparison websites.
The move comes after the Furman Review earlier this year, in which experts cautioned that there was an inadequate level of competition in the digital market. It recommended to the Government that a new regulator, or a “digital markets unit”, be put in place to ensure users could transfer their data from one digital service to another.
Andrew Tyrie, chairman of the CMA, said the body would advise the Government about how certain aspects of the Furman Review could be effectively implemented.
He said: “Much about these fast-changing markets is a closed book to most people. The work we do will open them up to greater scrutiny and should give Parliament and the public a better grip on what global online platforms are doing.”
Furthermore, the CMA said it would examine how it could adapt merger rules or introduce tougher interim measures if it identified something detrimental “developing fast” in the market.
The regulator said: “One area we are considering further is whether there might need to be some form of closer scrutiny for acquisitions by particularly powerful companies. We will continue to consider if any legislative changes to the merger regime are required.”
To date, some of Britain’s brightest technology companies have been snapped up by Silicon Valley companies, including DeepMind by Google in 2014, and artificial intelligence company Bloomsbury by Facebook in 2018.
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Last month, Lord Tyrie, head of the CMA, told MPs on the Business select committee that greater regulation would be needed to protect “vulnerable” online consumers. In May, he also stated that stricter fines, bans and prosecutions could be the solution to healthier market competition.
“I think the public would be shocked by the weakness of the sanctions in this area,” he said.
Commenting on the study, Antony Walker, the deputy chief executive of lobby group techUK, said that “open markets, robust competition and consumer control over data are essential to ensuring a healthy marketplace that retains the many benefits that digital advertising brings”. Walker also said that techUK would be involved with the study in order to ensure balance.
On Thursday, the CBI also suggested that current moves for internet regulation were going too far. In its response to the Government’s online harms white paper, the CBI said the plans for a statutory duty of care on tech companies to protect their users from harm “should focus on illegal harmful content and re-examine proposals for legal but harmful issues”.
CBI director-general Carolyn Fairbairn explained that it would be “unproportionate” to make companies liable for any harmful content on their site. She also said any new regulator in the space must be independent, properly resourced and equipped with the right expertise.