UK to set up 'pro-competition' regulator to put limits on big tech
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.
It will set up a new Digital Market Unit (DMU) to oversee an anti-competitive regime for internet platforms - including those funded by online advertising like Facebook and Google - the Department of Digital, Culture, Media and Sport (DCMS) gave known 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 deliberate on 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 completely opt out of behavioral advertising - something the Facebook platform, for example, currently doesn't allow.
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 set clear expectations for platforms with significant market power - known as strategic market status - in terms of acceptable behavior when interacting with competitors and users," DCMS wrote 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.
A Digital Markets Task Force, which 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, according to DCMS.
The Task Force will also develop the methodology used to determine which platforms / companies should be considered strategically marketable.
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 can only be done by the unit itself when it is operational. But UK policy makers don't seem to be fooled by fake big tech talking points that are "just a click away".
According to the UK report, competition policy will need to change to help startups battle the “winner takes all” platforms
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 that encompassed 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.
The UK is asking the competition watchdog to put the adtech market report at the top of their to-do list
Digital Secretary Oliver Dowden commented on the DMU's announcement in a statement as follows: “I'm outrageously pro-tech and the services of digital platforms are changing the economy positively - 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 it. It's time to look into it and usher in a new age of technical growth. "
Business Secretary Alok Sharma added, “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 crowded out. "
The UK's move to regulate big tech means that European lawmakers now have broad consensus that the platform's 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 called internet gatekeepers and apply a number of specific rules for fairness and transparency obligations on them with the aim of rebalancing competition. Plans to open algorithmic black boxes for supervision by the supervisory authorities are also planned at EU level.
Europe is supposed to restrict how Big Tech can push its own services and use third-party data
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.
Great Britain presents a safety-oriented plan to regulate Internet companies
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 empowerment 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 grapple with Big Tech's market power, it is interesting to recall how many times Facebook CEO Mark Zuckerberg made the DCMS committee's demands, evidence of online disinformation and digital campaigns (including the Data abuse by Cambridge Analytica) refused scandal) - not once, but so often we have lost the count.
It appears that the UK legislature has carefully noted this.
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