The new Digital Markets Unit may have the power to fine tech giants billions of pounds if they do not abide by a strict code of conduct, thanks to proposals from the Competition and Markets Authority.
The plans, which the CMA advised the Government about on Tuesday, grant the new regulator the power to hand out massive fines in order to enforce a code of conduct based on “fair trading and trust and transparency” aimed at creating a more competitive market.
This would benefit smaller tech rivals, media organisations and ultimately the consumer, but is naturally unpopular with the largest technology companies.
Mark Zuckerberg, founder and CEO of Facebook, rallied against the UK Government’s “anti-tech stance” towards his company and threatened to withdraw investment, warning against regulatory meddling in the industry.
Working alongside regulators such as Ofcom, the DMU could be granted powers to block, reverse or suspend major decisions of tech giants, particularly those that could have an anti-competitive impact on the market, such as mergers and acquisitions.
The rules would only affect companies that earn over £1 billion in UK revenue, termed as companies with strategic market status.
Given that Facebook holds 50% of UK digital advertising space and Google accounts for over 90% of UK search revenues, it is clear that these tech heavyweights are targets for closer supervision.
This massive market dominance concentrates growth of the UK digital sector to just a handful of companies – Digital Secretary Oliver Dowden believes this has a negative impact on digital innovation and less choice for consumers, and claims that his new proposals will encourage fairer access for smaller businesses.
Use Of Data
The code will also require digital advertisers to be more honest about their use of data, and force them to grant the consumer more choice over personalised advertising.
It will also restrictions that limit news publishers’ monetisation of their content. It is hoped that this will help the struggling industry of online journalism.
The new regulatory authority could transform the digital sector within the UK, as well as having an effect on other industries such as media and publishing.
It remains to be seen whether tech giants will reduce their investment in response, or whether they will abide by the new code of conduct.
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