CMA sets out plan to regulate technology giants

The government recently unveiled plans to set up a new technology regulator under the Competitions and Markets Authority (CMA), in an effort to help curb anti-competitive practices of the tech giants.

The CMA has now issued advice, produced by the Digital Markets Taskforce, outlining what it describes as “a modern regulatory regime fit for the digital age”.

If implemented, the CMA said the regime would govern the most powerful technology firms deemed to have strategic market status (SMS), which have substantial, entrenched market power.

The advice stipulates that the newly formed Digital Markets Unit (DMU) of the CMA will develop a legally binding code of conduct, which will be tailored to each firm. The CMA said the code will help to shape the behaviour of powerful digital firms and govern elements of how they do business with other companies, as well as how they treat their users.

The CMA has also recommended that the DMU should be able to intervene to ensure the tech giants are acting in a way that supports competition. One way this could be achieved, said the CMA in its advice to the government, is to impose interoperability requirements on technology firms and improve how consumers control and share their data.

The third area the CMA has urged government to focus on is in mergers and acquisitions (M&A), where the CMA would look at the benefits and risk to consumers.

Responding to the CMA’s advice, TechUK’s policy manager of digital regulation, Lulu Freemont, said: “TechUK welcomes today’s advice from the Digital Markets Taskforce as an important step in carving the way for how the UK plans to form a pro-competitive regime which supports innovation and open competition in digital markets.

“Building on the CMA’s consultative approach and taking the time needed to consider some of the more challenging questions in different markets, coupled with providing coherence across the board of digital regulators, will be beneficial to form an effective and proportionate framework,” she added.

The CMA’s advice to government on how to regulate the tech giants comes on the same day as the publication of the report, Decentralised vs distributed organisation: blockchain, machine learning and the future of the digital platform, from University College London (UCL), which warns of the harm from companies such as Amazon, TikTok and Google, which all operate global digital platforms. 

The report’s author and UCL associate professor, JP Vergne, warned that a handful of platforms dominate the global economy in the 21^st century mainly by using machine learning as their core technology to transform enormous amounts of personal data into prediction services.

According to Vergne, these tech giants cannot be competitively rivalled under the current regulatory frameworks because the datasets they have amassed cannot easily be shared or accessed by potential competitors. “Government appetite to regulate these companies is also tempered by the geopolitical benefits they deliver,” he wrote in the report.

Among his recommendations is that the big tech firms should be regulated and restricted in the same way as other essential utilities such as gas, electricity, telecommunications and water. He said that viewing dominant digital platforms as essential infrastructure would enable a “utility” designation with new obligations such as common carriage, non-discrimination, interoperability and fair competition.