The UK is pushing ahead with its plan to regulate big tech, responding to competitive concerns over the dynamics of a winner take all in digital markets.
A new Digital Market Unit (DMU) will be established to oversee an anti-competitive regime for Internet platforms – including those funded through online advertising like Facebook and google – The Department of Digital, Culture, Media and Sport (DCMS) announced today.
It moves in a clip – the new unit is scheduled to start work in April. Although the law necessary to enable the new regulator to intervene will take longer. The government said it would discuss the form and function of the unit in early 2021 – and pass laws "as soon as parliamentary time allows".
Central to the plan is a new legal code of conduct that aims to give platform users more choice and third-party companies more power over the intermediaries who host and monetize them.
The government suggests that the code could require tech giants to allow users to opt out of behavioral advertising entirely – something the Facebook platform doesn't currently allow, for example.
The Code is also designed to support the sustainability of the news industry by "rebalancing," as it says, the relationship between publishers and platform giants.
Concern about how to support quality journalism of public interest in an era of ad-supported, user-generated content has increased in recent years as online disinformation has been actively used to attack democracies and influence voices.
“The new code will have clear expectations of platforms with significant demands market Power – known as strategic market Status – about what constitutes acceptable behavior when interacting with competitors and users ”, wrote DCMS in a press release.
It is proposed that the DMU will have the power to "suspend, block, and reverse decisions made by technology giants, instruct them to take certain actions to achieve compliance with the Code, and impose financial penalties for violations." Although all the details should be worked out in the next year.
ONE Digital Markets The task force that the government set up earlier this year to advise on the design of the competition measures will inform the work of the unit, including the practical functioning of the regime, in accordance with the DCMS.
The Task Force will also develop the methodology used to determine which platforms / companies to classify as strategic market Status.
In this regard, it is far from certain that Facebook and Google will get the label and be subject to code and oversight by the DMU, although confirmation cannot be provided by the unit itself until it is operational. However, UK policymakers don't seem to be fooled by fake big tech talking points where competition is “just a click away”.
The move to set up a UK regulator for Big Tech's market power follows a competitive market review chaired by former US President Barack Obama's economic advisor, Professor Jason Furman, who reported last year. The panel of experts recommended that existing competition policies were fit for purpose but that new tools were needed to address the market challenges arising from the performance of the platform and the impact of online networks.
Crucially, the Furman report advocated a “broad ecclesiastical” interpretation of consumer protection as a driver of competitive interventions, encompassing factors such as choice, quality and innovation, not just price.
The UK's Competition and Markets Authority (CMA) also conducted a market study on the digital advertising sector and reported significant concerns about the power of the adtech duopoly. Though in its final report it postponed competition intervention pending government legislation.
Commenting on DMU's announcement in a statement, digital secretary Oliver Dowden said, “I'm outrageously pro-tech and the services of Digital Platforms are changing the economy in a positive way and bringing enormous benefits to companies, consumers and society. However, there is a growing consensus in the UK and abroad that the concentration of power among a small number of tech companies is holding back the growth of the sector, diminishing innovation and having a negative impact on the people and businesses that depend on them. It's time to look into it and usher in a new age of technical growth. "
Business Secretary Alok Sharma added, “T.The dominance of a few large tech companies leads to less innovation, higher advertising prices, and less choice and control for consumers. Our new pro-competitive regime for Digital Markets will ensure that consumers have choice and that smaller businesses are not evicted. "
The UK's move to regulate big tech means that there is now broad consensus among European lawmakers that platform power needs to be limited – and that competition rules require adequate funding to get the job done.
A similar digital market regime is to be presented by the EU legislature next month.
The European Commission has announced that the upcoming EU ex ante EU regulation, known as the Digital Markets Act, will identify platforms with significant market power, so-called internet gatekeepers, and apply certain rules and obligations related to fairness and transparency it is done with the aim of rebalancing competition. Plans to open algorithmic black boxes for supervision by the supervisory authorities are also planned at EU level.
A second part of the proposed EU legislation, the Digital Services Act, aims to update the rules for online businesses by setting clear rules and responsibilities for all actors in specific areas such as hate speech and illegal content.
The UK is also working on a similar online safety-centric regime that aims to address a range of damages in its White Paper on Online Damage last year. However, the draft law has yet to be submitted.
This summer, the BBC reported that the government has not committed itself to draft law next year either – suggesting that the planned broader internet regulatory system may not come into effect until 2023 or 2024.
It is smart for UK lawmakers to prioritize platform performance, as much of the problems that arise from malicious Internet content are related to the reach and reinforcement of a handful of tech giants.
A more competitive social media landscape could encourage competition for the quality of the community for users. This means that, for example, smaller platforms that properly enforce hate speech rules and do not compromise user privacy could gain an advantage.
Although rules enabling data portability and / or interoperability are likely to be critical to spark truly vibrant and innovative competition in markets that have already been captured by a handful of data mining adtech giants.
Given the UK's rush to address Big Tech's market power, it is interesting to recall the number of times Facebook CEO Mark Zuckerberg has denied DCMS committee requests to find evidence of online disinformation and digital campaigns ( including misuse of Cambridge Analytica data) scandal) – not once, but so many times we've lost the count.
It appears that the UK legislature has carefully noted this.