Of course, the regulator hasn’t named any names yet, but it’s moderate to assume that Apple and Google (aka Alphabet) will be among the most sensible on this survey list.
The CMA had previously found that the two companies over their respective mobile app retail stores created significant concerns about the festival. And, publishing a mobile market study on the duopoly in December 2021, it wrote that its work “so far” suggests the two would meet new SMS designation criteria for several of their ecosystem activities.
Tech giants that end up being subject to the UK’s special abuse regime can expect interventions that save them from prioritising their own products, the CMA also showed today.
In addition, he said they may simply be required to provide their competition with broader “data and functionality” than their business interests would like. Interoperability could also be imposed on some tech giants, the CMA suggested, as well as requiring them to negotiate on fairer terms. Algorithmic transparency may be just another requirement that the new regulator of virtual markets will impose on them.
The need for the Competition and Markets Authority (CMA) to have its own ex-ante playbook to take on the weight of big tech’s market position has been on the policymaking calendar in the UK for years. In November 2020, ministers showed their aim to implement a “pro-competitive” regime targeting generation platforms with significant market position power, with the aim of addressing some of the inclinations seen in virtual spaces, such as online advertising.
A key component of the plan for the new Digital Markets Unit (DMU), created within the CMA, which would be empowered to resolve rapid disruptions with interventions tailored to each platform. The reform is also more forceful, allowing consequences of up to 10% of annual turnover in the event of proven infringement.
Three+ years ago, when the government first committed to the plan to tackle platform power, it looked pioneering. However the turmoil in U.K. politics of the past several years contributed to delaying progress on enacting the reform. As a consequence the U.K. has slipped behind peers like the European Union — which adopted its own flagship digital competition reform last year. The deadline for in-scope tech giants’ compliance with that regime is looming in early March.
In the UK, the national temper changed again last April, when the government, led by Prime Minister Rishi Sunak, took the ball back into its own hands and brought the Digital Markets, Competition and Consumer Bill to Parliament. . Then, earlier this month, Ministers wrote to the CMA asking it to identify a roadmap for the long-term implementation of the regime. However, since the main points of the law are still being discussed by lawmakers, the request is limited to a “high-level” plan.
The CMA’s response today takes the form of an overview that gives some steerage of what may be coming down the pipe for a handful of tech giants operating in the U.K. once the regime is up and running.
In the abstract document, the regulator writes that the harms it decides to focus on will be decided by a set of “prioritization principles. “The text lays out a list of 11 “operating principles” (see chart below) that he believes will guide his decision-making on which one, among the myriad of battles imaginable against Big Tech abuses, to choose, adding that he will always focus on applying a pro-competition lens; decide for maximum impact; and seek to act temporarily (and repair the damage, to use a phrase) as problems evolve.
“We will think broadly about the benefits to consumers,” the CMA also writes, elaborating on its thinking on Principle 2 (i. e. impact). “In addition to the value of goods and (which is 0 in some virtual marketplaces), consumers can also appreciate choice, security, privacy, innovation, and their overall delight (e. g. , the amount of advertising they’re exposed to). “
Image credits: CMA
An ex ante reform of virtual competition, which came into force in the EU last year (the Digital Markets Act), adopts a more prescriptive approach to prohibitions and obligations, literally building a “do’s and don’ts” list for regulated activities. . So far, six tech giants have been designated as “gatekeepers” under the bloc’s regime (Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft), for a total of 22 “core platform services” they provide, ranging from adtech to operations. systems to search for messaging engines and platforms.
Some of the gatekeepers, Apple, have filed lawsuits against the DMA designations, but in the meantime the EU regime continues to apply.
Since the beginning of 2021, a German ex ante reform of virtual festivals has also been in force. In the update, the country’s regulator designated several tech giants, adding Amazon, Apple, Google and Meta, as subject to a special abuse regime for corporations deemed to be of “paramount importance to festivals in the markets. “Other tech giants remain under investigation for their market power.
The German regime has clocked up the most mileage of the regional ex ante reboots so far. And the Federal Cartel Office (FCO) can point to some notable shifts it’s extracted from in-scope giants since then — including Google agreeing to reform its data terms; and offering not to inject publisher content it’s directly licensing into search results, which the regulator was concerned would amount to a self-preferencing risk which could harm rival publishers who weren’t licensing their content to Google.
Under the FCO’s direction, Meta also agreed to offer users a way to opt out of its cross-site tracking last summer, in a victory for privacy through the unlikely direction of the festival reform Array (though the FCO has long been a pioneer in reading privacy exploitation as competitive abuse. )
It remains to be seen what effect a similar reform could have in the UK in the coming years. The government still wants to go ahead and get this bill through Parliament, so it’s unclear exactly when it will be up and running.
On the one hand, there will need to be enough parliamentary time before this year’s British general election to pass the bill. Once the law is in place, there may also be an era of implementation, and the CMA/DMU will want to adopt investigations to designate SMS. Therefore, it would possibly be several more years before the regime could exert pressure on Big Tech’s decisions.
Meanwhile, the CMA’s breakthrough offers some interesting clues as to where the DMU’s hammer might fall in the coming years. And one general trend is at least clear: Big Tech is facing ever-increasing restrictions on their operational freedom.
That said, broadening scrutiny of the internet giants that dominate the market may contribute to a strategic tactic of quasi-outsourcing business progression in which large tech corporations seek to invest in and partner with less-regulated startups that may engage in activities they did. directly, it could irritate regulators.
The links between cloud-computing infrastructure-owning Big Tech and generative AI startups look instructive here. Vast amounts of money and compute resource are being deployed in a way that threatens to enable current-gen tech giants to further extend their market dominance, via strategic tie-ups to startups operating at a claimed arm’s length distance from their own business empires, in spite of amped up competition oversight of their own core platform services. Microsoft-OpenAI anyone?
The UK will embark on long-awaited reform to take over big tech market power
UK festival watchdog develops principles for ‘responsible’ generative AI