UK Introduces Long-Delayed Digital Markets Legislation

The UK government is to introduce long-delayed legislation on Tuesday giving legal teeth to the Digital Markets Unit, set up in 2021 to provide greater oversight of dominant tech companies such as Amazon, Apple, Facebook parent Meta or Google, which are seen as stifling competition.

Until now the unit, which operates as part of the Competition and Markets Authority, has had no legal footing to take action.

That is set to change with the legislation giving the DMU the power to, for example, order the biggest tech firms to provide more choice and transparency to their customers.

If firms don’t abide by the rules the DMU is to be given the power to fine them up to 10 percent of their global turnover.

‘Strategic market status’

It is to be able to carry out targeted interventions into competition issues within digital markets, potentially opening up new paths for start-ups or smaller firms that previously struggled to grow and compete in these markets, the government said.

The regulations will also allow the CMA to tackle issues such as firms colluding to increase prices and the industry around fake reviews.

The proposals give the DMU powers to impose additional obligations on large tech firms considered as having “strategic market status”.

This targets firms with entrenched market power in at least one digital activity and global sales in excess of £25 billion globally, or UK revenue above £1bn.

‘Watershed moment’

“This has the potential to be a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy, supporting economic growth, investment and innovation,” said CMA chief executive Sarah Cardell.

The legislation must still be approved by Parliament.

While the DMU represented a pioneering step when it was first discussed in late 2019, the lengthy delays have seen it surpassed by the European Union’s landmark Digital Markets Act (DMA), which similarly targets the biggest tech firms.

The DMA itself mirrors similar rules that give the German antitrust regulator additional powers when probing firms of “paramount significance”.