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UK competition regulator launches new Digital Markets Unit

By | Published on Thursday 8 April 2021

Competition And Markets Authority

The UK’s Competition & Markets Authority yesterday announced the formal launch of its new Digital Markets Unit. It will – the competition regulator says – “oversee plans to give consumers more choice and control over their data” and “promote online competition and crack down on unfair practices” in the digital market place “which can often leave businesses and consumers with less choice and more expensive goods and services”.

The new unit is part of efforts in the UK, and elsewhere, to better regulate the big digital platforms like Google and Facebook. That regulation includes increasing the responsibilities of platforms in relation to offensive, abusive and misleading content, and also stopping the biggest platforms from unfairly or inappropriately exploiting their market dominance and the user data they amass.

The CMA’s Digital Markets Unit will focus more on market dominance and data concerns, while UK media regulator OfCom will take on new responsibilities regarding offensive, abusive and misleading content. Although the two regulators are expected to work closely together on certain issues.

Launching the new unit yesterday, the CMA stated: “Online platforms bring huge benefits for businesses and society. They make work easier and quicker and help people stay in touch. But there is a consensus that the concentration of power among a small number of firms is curtailing growth and having negative impacts on consumers and businesses which rely on them”.

“In November 2020”, it went on, “the government announced a new unit would be set up to enforce a new pro-competition regime to cover platforms with considerable market power – known as strategic market status. The new unit has today kicked off its first work programme as it launches in ‘shadow’ non-statutory form ahead of legislation granting its full powers”.

As for the new unit’s initial priorities, the CMA added: “The government has asked it to begin looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups such as small businesses which rely on them to advertise or use their services to reach their customers. It will take a sector neutral approach in examining the role of platforms across a range of digital markets, with a view to promoting competition”.

In addition to that, “the Digital Secretary has asked [the unit] to work with the communications regulator OfCom to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers, including to ensure they are as fair and reasonable as possible”.

That latter project pushes the Digital Markets Unit into copyright territory, and the sometimes contentious debate about the sharing of news content from media websites on social networks, and to what extent platforms should seek licences for that content. New rules in that domain were among the more controversial elements of the 2019 European Copyright Directive, and similar new laws in Australia caused similar controversy earlier this year.

Whether the DMU will get involved in other copyright matters remains to be seen. Obviously the music industry is still keen to get the copyright safe harbour reformed in the UK, at least in line with the reforms already underway in the European Union (via the other controversial section of the 2019 directive). Though the DMU’s remit is mainly the biggest of the digital platforms – ie those that have that “strategic market status” – and copyright owners would like see any safe harbour reforms affecting a wider range of platforms than that.

Commenting on the launch of the new unit, Digital Secretary Oliver Dowden said: “Today is a major milestone in the path to creating the world’s most competitive online markets, with consumers, entrepreneurs and content publishers at their heart. The Digital Markets Unit has launched and I’ve asked it to begin by looking at the relationships between platforms and content providers, and platforms and digital advertisers. This will pave the way for the development of new digital services and lower prices, give consumers more choice and control over their data, and support our news industry, which is vital to freedom of expression and our democratic values”.

Meanwhile, CMA CEO Andrea Coscelli added: “People shopping on the internet and sharing information online should be able to enjoy the choice, secure data and fair prices that come with a dynamic and competitive industry. Today is another step towards creating a level playing field in digital markets. The DMU will be a world-leading hub of expertise in this area and when given the powers it needs, I am confident it will play a key role in helping innovation thrive and securing better outcomes for customers”.