UK to create a new regulatory regime to curb the market power of Google and Facebook

New unit of the Competition and Markets Authority will be given powers to prevent tech platforms from driving out smaller rivals, government says

The Competition and Markets Authority (CMA) is set to receive a dedicated competition unit next year with promised sufficient power to prevent Google and Facebook from abusing their market dominance by driving out smaller rivals.

In March, the CMA was asked to lead a Digital Markets Taskforce to advise the government on how a new pro-competition approach could be designed for digital markets.

In its final report, published in July, the CMA outlined a number of factors that undermine competition and entrench the market power of the major tech companies.

The government has now accepted, in principle, the findings of CMA's study, promising to create a new pro-competition regulatory regime to curb the market power of tech giants like Google and Facebook.

The new body, dubbed the Digital Markets Unit (DMU), is expected to start work from April next year and will likely have powers to block and reverse decisions made by tech giants.

The unit will also have authority to impose financial penalties on companies for non-compliance.

The new code of practice, which the DMU will write in the coming months, will impact only those firms that are thought to have "strategic market status". It may also insist that tech firms provide users with a choice over whether they wish to receive personalised ads on their devices, and the DMU could force tech platforms to change the way in which they operate with rival platforms.

Commenting on the move, Business Secretary Alok Sharma acknowledged the contribution that digital platforms like Facebook and Google make to the UK's economy, but said their dominance is leading to higher advertising prices, less innovation and less choice for consumers.

"Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren't pushed out," he added.

Andrea Coscelli, the CEO of the CMA, welcomed the government's decision to set up a dedicated unit to regulate the dominance of big tech firms and to set out the limits of acceptable behaviour.

"Only through a new pro-competition regulatory regime can we tackle the market power of tech giants like Facebook and Google and ensure that businesses and consumers are protected," Coscelli said.

Big tech companies, including Google and Facebook, have been facing intense scrutiny in many countries over issues such as abuse of their market power and their handling of users' data.

Last month, the US House Judiciary Committee's Antitrust Subcommittee released the findings of its 16-month-long investigation into the challenges posed by the immense power of tech giants in the digital economy. The report concluded that companies like Google and Facebook are effectively monopolies, and are abusing their dominance to control access to markets and pick winners and losers.

It also accused the tech firms of imposing harsh contract terms, charging excessive fees and extracting data from customers and businesses.

And last month, it was reported that regulators in the EU were preparing a 'hit list' of up to 20 large technology platforms that may find themselves subject to new and tougher regulations compared to their smaller rivals. Under those rules, companies listed may be required to share their data with rivals and be more transparent about how they gather information from their users.