No images? Click here Welcome to The Corner. In this issue, we review a new UK law that would help protect citizens from Big Tech predation but still lacks strong political support.
Later this month, the British government is expected to publish landmark competition legislation known as the Digital Markets, Competition and Consumer Bill. The most significant upgrade to the UK’s competition powers in many years, the bill mirrors similar legislation recently passed in other jurisdictions, including the EU’s Digital Markets Act (DMA). Yet despite the many benefits it will bring to British citizens, businesses, consumers, and society more broadly, its path to adoption will not be straightforward. Until recently, the UK led efforts to understand and tackle Big Tech’s dominance, most importantly with the government-commissioned Digital Competition Expert Panel calling for dedicated digital markets legislation back in 2019. For its part, the UK’s competition authority, the Competition and Markets Authority (CMA), has been one of the most energetic, strategic, and ambitious regulators around, conducting groundbreaking studies and investigations into Big Tech’s stranglehold over different sectors of the economy, and being the first authority ever to block a Big Tech acquisition (Meta/Giphy) in 2021. But with the EU DMA already in the implementation phase, and similar rules on the books in Germany since early 2021, the lack of clear political support for the new legislation means the UK increasingly looks like a laggard when it comes to reining in Big Tech. So why the holdup? One big reason is the disarray in the machinery of government created by the Brexit process, and the countless changes in leadership since then. Another is elements in the cabinet and Conservative party who mistakenly see the reforms as a threat to — rather than an enabler of — the UK’s competitiveness. A third factor is a general failure by the Labour Party to show any real interest in the bill or the larger threat posed by monopoly power more generally. Although Labour does not have any formal control over the timing of the legislation, its role as the official opposition provides it with ample opportunity to put pressure on Downing Street to move faster. Whatever the reason, the Digital Markets, Competition and Consumer Bill had been buried in the long grass until the current Chancellor, Jeremy Hunt, unexpectedly committed late last year to publishing it in the current Parliamentary session — and possibly as soon as the end of this month. On the face of it, based on previous indications of the government’s thinking, the bill will look rather similar to the DMA. It will give a new unit within the CMA, the Digital Markets Unit (DMU), far-reaching powers to designate Big Tech firms as having ‘Strategic Market Status’ (SMS) and reshape their behavior through ‘codes of conduct’ and ‘pro-competitive interventions’, not unlike the treatment of so-called ‘gatekeepers’ under the DMA. But there are also important differences. Unlike the purely tech-focused DMA, the UK bill will also make wider changes to the overall competition framework, including a stricter merger control regime and beefed-up consumer protection powers for the CMA. One of the most notable areas of divergence relates to the DMU’s expected ability to create tailored rules for each Big Tech platform, as opposed to the DMA’s approach of applying a standard set of pre-defined obligations to all gatekeepers. If used well, this flexibility could prove to be a powerful advantage for the DMU, by enabling it to target each Big Tech giant’s business model more precisely and making it easier to write new rules for emerging technologies. The big risk, however, is that the process falls prey to Big Tech’s mighty lobbying power, and industry effectively writes rules for itself. One area where Big Tech is likely to lobby particularly aggressively is in relation to the bill’s appeal standard. While the government is in favor of allowing judicial reviews of the DMU’s decisions — whereby only the procedural aspects of a decision are examined — the tech giants could try to secure a ‘full merits’ review process, giving them the ability to challenge the substance of decisions and tie up the DMU and CMA in protracted legal battles. Failure to resist Big Tech’s lobbying would be a huge mistake — for the UK’s tech sector and the country as a whole. If implemented effectively, the new bill would help place the UK at the vanguard of global efforts to simultaneously break the hold of concentrated corporate power over our societies, while also strengthening innovation, economic opportunity, media plurality and ultimately democracy. It is an opportunity the UK, with its struggling economy and polarized politics, cannot afford to miss. 📝 WHAT WE'VE BEEN UP TO:
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We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:📚 WHAT WE'RE READING:“Spinning Amazon’s Flywheel: How Amazon's Business Model Harms Competition - A View from Europe.” (Geradin Partners, Damien Geradin and Tom Smith). In this working paper, the authors explore the various anti-competitive practices that Amazon has deployed in Europe and propose how to activate the solutions contained in the EU’s Digital Markets Act, which is being implemented this year, and in the upcoming UK Digital Markets, Competition and Consumer Bill. 🔎 TIPS? COMMENTS? SUGGESTIONS? We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. |