Furman Review urges greater competition for tech giants

Large technology firms such as Google, Amazon and Facebook should face more competition so opportunities of the digital economy can be unlocked, according to a government review of sector giants.

The final report is the result of an expert panel led by former US president Barack Obama’s chief economic advisor, Jason Furman. The review was commissioned by chancellor Philip Hammond last year and makes recommendations on changes to competition and pro-competition policy to ensure the UK’s digital standing. Hammond is expected to initially respond to the report in his Spring Statement today (13 March 2019).

Furman, a Harvard professor, said in the report that policies would need to be updated to address new challenges posed by the digital economy, with “policy responses that adapt and foster effective competition in uncertain conditions” and ensure greater consumer choice and innovation.

Central to the recommendations set out in the report is the creation of a digital markets unit with skills across technology, economics and behavioural sciences to “establish the rules of the game” for sector companies.

A code of conduct for the largest companies should also be introduced, according to the report. Though it anticipates this may need to be enforced only rarely, the report points out that upfront discussion and establishing what constitutes acceptable practice would help pre-empt most issues.

The code of competitive conduct should be created in partnership with the technology sector by the new unit, which would have powers to impose solutions and to monitor, investigate and penalise non-compliance.

Central to the recommendations set out in the Furman Review is the creation of a digital markets unit with skills across technology, economics and behavioural sciences to “establish the rules of the game” for sector companies

Another key point raised in the report is that the government should ensure that authorities responsible for enforcing competition and consumer law, such as the Competition and Markets Authority (CMA), have more powers to carry out their functions in the digital economy.

For example, the CMA should be able to block future acquisitions of digital companies if it found that the downsides of removing a competitor from the market outweighed any benefits. The CMA should also be informed about intended acquisitions by large companies.

The Furman Review also highlights the introduction of measures to promote greater data mobility as another key area where change is required, so giving people more control over their own information to allow them to change platforms more easily.

Greater data openness, so creating a requirement for large companies to share datasets, is another point raised in the main recommendations as a pro-competition tool, where the government would work with the industry towards setting and managing common data standards.

In response to the report, TechUK chief executive Julian David said any changes to competition law must “build on existing good practice” and take “the importance of maintaining a diverse ecosystem of large and small players to the UK digital market” into account.

Enhancing the digital expertise within regulators, as well as all government bodies involved with digital policy, is a good idea, said David, but he pointed out that “significant further detail” was needed around the proposed code of conduct, as well as a risk-benefit analysis of opening up datasets.

“Such issues raise important questions around the protection of personal data which may not easily be overcome. There may also be technical barriers to such a proposal due to the interoperability of datasets,” he said, adding that new requirements must not “brush over” potential practical challenges.

“The UK must ensure that the UK competition and wider regulatory framework is not in conflict with the other leading digital economies with which we must compete.”