The British government hasn’t yet succeeded in passing its flagship piece of internet regulation, but it’s about to introduce a second. Hot on the heels of the online safety bill comes the digital markets, competition and consumer bill, introduced today “to crack down on rip-offs, protect consumer cash online and boost competition in digital markets”.
From our story:
Major tech firms face the threat of multibillion-pound fines for breaching consumer protection rules under new legislation that will tackle issues including fake online reviews and subscriptions that are difficult to cancel.
The digital markets, competition and consumers bill will empower the UK’s competition watchdog to tackle the “excessive dominance” that a small number of tech firms hold over consumers and businesses.
Firms that are deemed to have “strategic market status” – such as tech firms Google and Apple, and online retailer Amazon – will be given strict rules on how to operate under the bill and face a fine representing up to 10% of global turnover if they breach the new regime.
Just like the online safety bill, this is multiple pieces of regulation squashed together in a somewhat ungainly fashion.
One – undoubtedly the most important – part of the bill is aimed at beefing up the Competition and Markets Authority, the UK’s competition regulator. It finally gives statutory powers to the “digital markets unit” (DMU), a subgroup of the CMA formed to monitor and regulate, well, digital markets – specifically, the largely American mega-platforms whose scale and heft defines the contours of the internet and, increasingly, society in general.
The DMU was first announced almost two and a half years ago, after the government revealed plans to empower the unit to write and enforce a new code of practice for technology companies. And it’s been reannounced every year since then: in 2021, the CMA announced it would set up the unit “later this year”, which it duly did. But the unit wasn’t given any actual power, so in May 2022 the government announced that ministers would introduce legislation to bestow it the ability to actually issue fines and create rules.
That legislation has finally been introduced. The government simply needs to pass it, a task that should be trivial for a party with a parliamentary majority of 67 but is frequently beyond the ken of this one (as anyone who has followed the online safety bill through its half-decade history will be all too aware).
Once (if?) it passes, the DMU will be empowered to regulate a tiny number of enormous companies – an FT report (£) on a leaked draft of the bill suggests that the threshold for coverage will be £1bn of UK revenue, or £25bn of global revenue. That would include giants like Apple, Meta and Microsoft, but exclude still very large companies like Spotify, Epic Games (of Fortnite fame) and TikTok.
Those tech titans will be deemed to have “strategic market status”, opening themselves up to handcrafted rules designed “to provide more choice and transparency to their customers”. It’s too soon to know what those rules might be, but expect this to be the mechanism by which the UK state begins putting pressure on companies over their app stores, marketplaces and advertising offerings: all the parts of a massive platform that don’t easily fall under traditional competition policy but do, at the scale of these businesses, have a substantial economic impact.
The DMU will have teeth, theoretically: breaches of its rules can come with a fine of up to 10% of global turnover. It will also be able to “carry out targeted interventions”, the government says, “opening up new paths for start-ups or smaller firms that have previously struggled to grow and compete in these markets”. Think, for instance, requiring a market leader to reduce barriers to building services on top of its platform.
The second part of the bill is distinct but overlapping, giving the CMA itself more powers to directly enforce consumer law. At the moment, an awful lot of its functions require a lengthy court process, and the government wants to give it the ability to directly impose penalties for breaching consumer law, again with a fine of up to 10% of a company’s global turnover.
And then, awkwardly tied to the CMA part of the bill, is the rest of it. This is the stuff that has made the headlines in the consumer press: a ban on fake reviews, a policy to end “subscription traps”, and a new requirement to advise customers when a free trial or introductory offer is coming to an end.
Those policies are good popular reforms, but are unlikely to have anywhere near the impact of the meatier regulatory side of the bill. The consumer rights group Which? supports them, at least:
Whether it’s fake reviews by dishonest businesses or people getting trapped in unwanted and costly subscriptions, our consumer protections are overdue an upgrade. Which? has long campaigned for stronger powers for the Competition and Markets Authority, including tough enforcement and the ability to fine firms that break the law directly.
In the meantime, the online safety bill trundles ever onwards. Last week it was reintroduced to the House of Lords, where it is winding through committee stage. WhatsApp and Signal have united and implied they may withdraw from the country entirely if it passes unchanged. The government doesn’t appear to care. Politics!
Bl-ew tick
A quick recap of verification on Twitter:
It’s like selling Nobel prizes to raise revenue, then taking all the Nobel prizes you had previously awarded back and wondering why a Nobel prize isn’t impressive any more. Truly genius stuff.
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• Last week’s TechScape included a wrong name for AI wrangler Simon Willison. It has been corrected in the web version.
