Key Takeaways
- The proposed Digital Markets, Competition and Consumers Bill seeks to address Big Tech's market dominance and strengthen consumer rights in the UK.
- The bill aims to reduce competition intervention time, tackle fake reviews and subscription traps, and empower the Digital Markets Unit to conduct faster and more flexible competition investigations.
- Tech companies with annual revenues of at least £25 billion globally or £1 billion in the UK will be subject to the new rules, and firms that breach these rules may face fines of at least 10% of their global annual revenues.
- The proposed legislation targets tech giants such as Amazon, Apple, Google, Microsoft, and Meta, which have faced accusations of limiting competition through various means.
- The government has expressed intentions to implement the new measures as soon as possible after parliamentary approval, but the new powers may be subject to secondary legislation and the publication of guidance, potentially resulting in a longer runway before Big Tech giants are forced to amend their business practices in the UK.
The UK government has unveiled the draft Digital Markets, Competition and Consumers Bill, which aims to address Big Tech’s market dominance and strengthen consumer rights.
The proposed legislation seeks to empower the Digital Markets Unit (DMU), which has operated within the Competition and Markets Authority (CMA) for over two years, to regulate platforms with strategic market status (SMS).
The government believes this move will promote innovation and competition in digital markets.
Reducing Competition Intervention Time
The bill aims to shorten the time taken for competition intervention by empowering the CMA to enforce consumer law directly, eliminating the need for lengthy court processes.
It will also increase penalties for breaches of consumer law, with fines scaling up to 10% of global turnover.
The UK’s approach to ex ante competition reform will be different from the EU’s, with the DMU designing bespoke conditions for each tech giant to ensure proportional oversight and avoid overregulation.
Tackling Fake Reviews and Subscription Traps
The legislation targets fake reviews and subscription traps to improve online shopping experiences and make it easier for consumers to exit unwanted contracts.
Businesses will be required to take reasonable steps to verify the genuineness of consumer reviews and to send reminders when free trials or introductory offers are about to end.
The bill is expected to increase consumer choice and confidence in online products and services.
The proposed legislation seeks to empower the Digital Markets Unit (DMU), which has operated within the Competition and Markets Authority (CMA) for over two years, to regulate platforms with strategic market status (SMS).
Enhanced Enforcement Powers for the Digital Markets Unit
The draft bill will empower the DMU to conduct faster and more flexible competition investigations and to block and investigate Big Tech mergers and acquisitions more efficiently.
Tech companies with annual revenues of at least £25 billion globally or £1 billion in the UK will be subject to the new rules.
Firms that breach these rules may face fines of at least 10% of their global annual revenues. The bill is yet to be approved by lawmakers but is likely to receive cross-party support.
Implications for Big Tech Companies
The proposed legislation targets tech giants such as Amazon, Apple, Google, Microsoft, and Meta, which have faced accusations of limiting competition through various means, including restricting software use to certain platforms and using customer data to boost their businesses.
Although the maximum 10% fine threshold is rarely reached in the competition law field, companies should be concerned about the reputational risk associated with infringements, as businesses often worry more about adverse PR impacts than the fines themselves.
Next Steps for the Draft Bill
There is currently no fixed timeline for when the new legislation may be enacted, but the government has expressed intentions to implement the new measures as soon as possible after parliamentary approval.
However, the new powers may be subject to secondary legislation and the publication of guidance, potentially resulting in a longer runway before Big Tech giants are forced to amend their business practices in the UK.
