Govt drags feet with new digital markets bill
A new report by MPs on the Business, Energy and Industrial Strategy Committee has called on the Government to push forward with a draft Digital Markets Bill that would allow regulators to take a more proactive approach to curbing big tech dominance.
The bill would enshrine the Competition and Markets Authority’s (CMA) Digital Markets Unit (DMU) into law and provide the unit with a greater ability to intervene on more micro details of Silicon Valley strategy.
This would add to the CMA’s already extensive powers to investigate — seen most recently with its decision to block Meta’s acquisition of Giphy.
“The Competition, Consumer and Digital Markets Bill has wide support and should be prioritised, especially given the difficulty the Government currently has at passing other laws which are more controversial,” BEIS Committee Chair Darren Jones said.
“There are many areas in the economy where stronger competition is required in the interests of consumers, small business and economic growth and this bill is an essential stepping stone to driving this issue forward.”
However, executive director at the Tony Blair Institute Sam Sharps told City PM that the reluctance to create a new regulatory framework is based on a more pro-Brexit stance towards competition.
“It seems like something that Brussels would do,” Sharps said, explaining that the government feels more focused on moving away from the EU than emulating it with the DMU.
Institute of Economic Affairs’ Matthew Lesh also told City PM, that the DMU runs the risk of threatening the tech ecosystem, putting excessive burdens on companies that make the likes of Google less inclined to invest in new products here.
“CMA already has a lot of power, so not sure if they need that,” he said.
A report from the Institute of Economic Affairs previously criticised the DMU, stating that there was a danger that the vague criterion given would curb innovation across UK start-ups.
IEA fear that overbearing regulation would impose intrusive controls and ‘central planning’, reminiscent of the regulation of old-style utility industries.
As pointed out by Sharps, it is possible that a DMU enshrined in legislation could block a route where it is impossible for startups to be acquired for a hefty sum by bigger players: a key driver for innovation and growth in business.
For instance, if a code of conduct laid out conditions where it blocked Google or Facebook parent companies from buying other companies, this could include other players who could benefit from acquisition.
On the flip side, he said that more rules around big tech dominance could unlock more opportunities for startups: where they aren’t unfairly disadvantaged against the Googles of the world.
A CMA Spokesperson said: “We welcome and thank members of the Committee for their report. The CMA will now carefully consider and respond to the Committee’s recommendations in due course.”