The Competition and Markets Authority (CMA) has issued guidance to the UK government on how to “proactively shape the behaviour of the most powerful tech firms”.
This follows news earlier this month of the creation of the Digital Markets Unit, set up to establish a new code for online platforms to address alleged anti-competitive practices of tech giants such as Google and Facebook.
At the time, details on the code had not been confirmed, but the CMA has now issued advice on the design and implementation of the new rules.
Produced by the Digital Markets Taskforce, which also includes assistance from Ofcom, the ICO and the FCA, the code will apply to tech firms with “strategic market status” and has been set out in three main pillars.
Firstly, the task force has proposed a legally binding code of conduct for each company, overseen by the DMU. The code is designed to “shape the behaviour of powerful digital firms, upfront, and govern elements of how they do business with other companies and treat their users”. The CMA noted that there could be “significant penalties” for breaching the code.
Secondly, “pro-competitive interventions”, such as interoperability requirements that would enable consumers to have more control over their data, have been proposed as a means of allowing other companies to grow and encouraging innovation.
Lastly, enhanced merger rules would enable the CMA to investigate transactions between companies with strategic market status more closely and address concerns such as whether a deal could cause harm to consumers.
CMA calls for “pro-competition” Big Tech rules
The government has committed to consult on proposals for a new pro-competition regime in 2021, with the task force urging the government to act quickly in the creation of a “modern pro-competition, pro-innovation regime”.
Emily Cox, Partner at law firm Stewarts said:
“The Digital Markets Taskforce’s advice to the government marks a big step forward in the regulation of Big Tech in the UK. The designation of certain companies as having Strategic Market Status, with individual rules to follow and the spectre of fines worth 10% of global revenue for abuses will do much to focus Silicon Valley minds. It should also ensure that the mistakes of the past, in allowing certain data-driven mergers by Big Tech, do not recur.”
“The challenge will be to ensure that the proposed tailored, flexible and collaborative approach to regulation does not come at the cost of legal certainty for – and ultimately good outcomes for – competitors and consumers.”
She added that the consultation process needs to happen “swiftly at the start of 2021” to avoid the risk of the UK falling behind regulators in Europe.