New regulator launched to stop tech giants exploiting their online market dominance

A new regulator has been launched by the UK Government to stop tech giants such as Facebook and Google exploiting their online market dominance.

The Digital Markets Unit (DMU), based in the Competition and Markets Authority (CMA), will oversee plans to give consumers more choice and control over their data, promote online competition and crack down on unfair practices that can leave businesses and consumers with less choice and more expensive goods and services.

This comes in response to concerns that these online behemoths are crowding out competition and stifling online innovation. 

Launched on Wednesday, the DMU will initially work on a non-statutory basis ahead of legislation granting it full powers.

The UK Government has said it will consult on the design of the new pro-competition regime this year and legislate to put the DMU on a statutory footing as soon as parliamentary time allows. 

Led by Will Hayter, who takes over following his work at the Cabinet Office supporting the UK's transition out of the EU, the new unit will work closely with the CMA enforcement teams already taking action to address practices by digital firms that harm competition and lead to poor outcomes for consumers and businesses.

This includes taking enforcement action against Google and Apple, and scrutinising mergers involving Facebook and eBay.

The DMU will also work closely with other regulators including the Information Commissioner’s Office, Ofcom and the Financial Conduct Authority.

The UK Government has published an outline of the new unit’s function and role for its first year of operation.

This includes working alongside business, the government and academia to compile the necessary evidence, knowledge and expertise so that once the new pro-competition regulatory regime is in place it can begin operation as quickly as possible. 

Initially, the UK Government has set the DMU the task of looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups such as small businesses which rely on them to advertise or use their services to reach their customers.

Digital secretary Oliver Dowden has asked it to work with the communications regulator Ofcom to look at how a code would govern the relationships between platforms and content providers such as news publishers to ensure they are as fair and reasonable as possible. 

Dowden said: “Today is a major milestone in the path to creating the world’s most competitive online markets, with consumers, entrepreneurs and content publishers at their heart. 

“The Digital Markets Unit has launched and I’ve asked it to begin by looking at the relationships between platforms and content providers, and platforms and digital advertisers.  

“This will pave the way for the development of new digital services and lower prices, give consumers more choice and control over their data, and support our news industry, which is vital to freedom of expression and our democratic values.” 

The unit will also coordinate with international partners in this area.

The UK is already discussing its approach to digital competition with international partners through bilateral engagement and as part of its G7 presidency.

Dowden will host a meeting of digital and tech ministers in April with the aim of building consensus for coordination on better information sharing and joining up regulatory and policy approaches.

Business secretary Kwasi Kwarteng said: “This is a significant step towards our goal of improving consumer choice and delivering better services at lower prices.

 “The UK has built an enviable reputation as a global tech hub and we want that to continue – but I’m clear that the system needs to be fair for our smaller businesses, new entrepreneurs and the wider British public.

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 “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.”

Andrea Coscelli, chief executive of the CMA, added: “People shopping on the internet and sharing information online should be able to enjoy the choice, secure data and fair prices that come with a dynamic and competitive industry.

“Today is another step towards creating a level playing field in digital markets.

“The DMU will be a world-leading hub of expertise in this area and when given the powers it needs, I am confident it will play a key role in helping innovation thrive and securing better outcomes for customers.”