Google and Facebook: Tech giants face tougher UK rules to curb dominance

A new UK watchdog is to police the dominance of tech giants such as Google and Facebook to try to prevent them exploiting consumers and small businesses.

The Digital Markets Unit will enforce a new code of conduct governing the behaviour of the powerful online platforms.

The move comes in response to government concerns that the corporations are restricting growth of the sector and hampering innovation.

The new body, which will lie within the Competition and Markets Authority (CMA) and co-ordinate with regulators including Ofcom and the Information Commissioner’s Office, is due to begin work in April.

It could be given powers to suspend, block and reverse decisions made by technology firms and to impose fines for failing to follow the rules.

Companies will have to be more transparent about how they use consumer data and restrictions that make it hard to use rival platforms will be banned, the government said.

The rules also aim to support the news industry by rebalancing the relationship between publishers and platforms.

Business Secretary Alok Sharma said: “Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives – whether it’s helping us stay in touch with our loved ones, share creative content or access the latest news.

“But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers.

“Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out.”

Google and Facebook dominate digital advertising, accounting for around 80% of the £14bn spent in 2019, according to the CMA.

The two US companies have said they are committed to working with the UK government and the regulator, including giving users greater control over their data and the ads they receive.

The crackdown forms part of a wider push by governments in the US and Europe to curb the power of big tech firms in the face of concerns about their influence.

The European Union has unveiled proposals to take control of data from companies and is set to release details next month of a shake-up of digital regulations aimed at preventing competition being stifled.

In the US, the authorities are pursuing an antitrust case against Google, and politicians have proposed breaking up large tech companies.

Analysis: Despite the bold talk, the UK may have limited power
By Rowland Manthorpe, technology correspondent

In March last year, I asked Jason Furman, the US economist leading the government enquiry into the dominance of the tech giants, whether the biggest tech companies should be broken up.

It didn’t matter what he thought, he told me with a shrug, because the UK wasn’t capable of such a move.

“It’s not really an option,” he said. “If the UK wanted to break up Facebook, I’m not sure Facebook would really listen.”

Instead, Professor Furman proposed a set of “pro-competition” reforms to encourage more companies to compete with the tech giants, including the creation of a “digital markets unit”. Now, more than 18 months later, the government is taking the first step to making that a reality.

The new code of conduct for the unit is still being developed, but with this background we should not expect it to be especially radical. There will probably be more scrutiny of deals, perhaps using different definitions of market dominance and metrics other than pricing.

An early test of this “pro-competition” model will come from the media, whose old business model is collapsing in the face of the digital challenge. Traditional outlets are lobbying hard for special treatment. Will the new code of conduct cater to them, or to the next generation of up-and-coming competitors?

All this is taking place against the background of Brexit. The new UK unit is essentially replicating the work currently undertaken by the European Commission. It hasn’t had any great success in restraining the tech giants, despite representing a far larger market. How will a small team inside the Competition and Markets Authority fare any better?

As Professor Furman pointed out, the question is not what the UK should do, but what it can do (or what its rulers feel they can realistically achieve). Despite the bold talk, the answer may well be: not very much.

(c) Sky News 2020: Google and Facebook: Tech giants face tougher UK rules to curb dominance