New UK regulator to rein in Google, Facebook, other tech giants
Tech giants such as Google and Facebook will be subject to a new UK regime to give consumers more choice and control over their data, help small businesses thrive, and ensure news outlets are not forced out by bigger rivals, business secretary Alok Sharma announced on Friday.
A dedicated Digital Markets Unit to be set up within the Competition and Markets Authority (CMA) in April will work closely with regulators including Ofcom and the Information Commissioner’s Office to introduce and enforce a new code to govern the behaviour of the tech giants.
Officials said online platforms bring huge benefits for businesses and society, but there is growing consensus in the UK and abroad that the concentration of power within a small number of tech companies is curtailing growth in the tech sector, reducing innovation, and potentially having negative impacts on the people and businesses that rely on them.
The new code will set clear expectations for platforms that have considerable market power - known as strategic market status - over what represents acceptable behaviour when interacting with competitors and users.
Under the new code, platforms including those funded by digital advertising could be required to be more transparent about the services they provide and how they are using consumers’ data, give consumers a choice over whether to receive personalised advertising, and prevented from placing restrictions on their customers that make it hard for them to use rival platforms.
The new unit could be given powers to suspend, block and reverse decisions of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance.
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”.
The officials said the code could be used to ensure platforms are not applying unfair terms, conditions or policies to certain business customers, including news publishers. Currently, dominant online platforms can impose terms on news publishers that limit their ability to monetise their content - severely impacting their ability to thrive.
The new code will govern commercial arrangements between publishers and platforms to help keep publishers in business, helping enhance the sustainability of high-quality online journalism and news publishing in the UK.
According to a CMA study, Google has significant market power in the general search market and in search advertising, and Facebook has significant market power in the social media market and in display advertising.
Nearly £14 billion was spent on digital advertising in the UK in 2019, around 80% of which was spent on Google and Facebook. The CMA noted that the number of advertisements that consumers are exposed to on digital platforms is increasing, with adverts seen per hour on Facebook rising from 40-50 in 2016 to 50-60 in 2019. Its average revenue per user is now more than 10 times higher than competitors, it added.