Antitrust Law Daily New U.K. watchdog ‘shadow’ launches to monitor tech giants
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Wednesday, April 7, 2021

New U.K. watchdog ‘shadow’ launches to monitor tech giants

By Jeffrey May, J.D.

The Digital Markets Unit will oversee plans to give consumers more choice and control over their data, promote online competition, and crack down on unfair practices.

The U.K. Competition and Markets Authority (CMA) announced today the launch of the Digital Markets Unit (DMU), which will monitor tech giants, such as Facebook and Google, in an effort to promote online competition and crack down on unfair practices. According to the agency, the new regulator is intended to help make sure tech giants cannot exploit their market dominance to crowd out competition and stifle innovation online. Late last year, the U.K. government unveiled the new unit. It has now been kicked off in ‘shadow’ non statutory form ahead of legislation granting its full powers. The DMU will be led by Will Hayter, who had worked at the Cabinet Office supporting the UK’s transition out of the European Union.

The U.K. government has asked the new watchdog to begin looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups such as small businesses, which rely on them to advertise or use their services to reach their customers. The CMA says that it will take a sector neutral approach in examining the role of platforms across a range of digital markets, with a view to promoting competition.

"Today is another step towards creating a level playing field in digital markets," said CMA Chief Executive Andrea Coscelli. "The DMU will be a world-leading hub of expertise in this area and when given the powers it needs, I am confident it will play a key role in helping innovation thrive and securing better outcomes for customers."

The CMA has been looking closely at the conduct and transactions of tech giants. In March, the CMA notified Facebook and Giphy that their completed merger raises significant competition concerns. Giphy is an online database and search engine that allows users to share animated images, or GIFs, through Giphy’s website or app, or through social media platforms such as Facebook, Instagram, Twitter and TikTok. In May of 2020, Facebook announced it had acquired Giphy.

Earlier this year, the CMA announced that it was investigating whether Google’s proposals to remove third party cookies and other functionalities from its Chrome browser could cause advertising spend to become even more concentrated on Google’s ecosystem at the expense of its competitors. Google’s announced "Privacy Sandbox" project would disable third party cookies on the Chrome browser and Chromium browser engine and replace them with a new set of tools for targeting advertising and other functionality that they say will protect consumers’ privacy to a greater extent.

Algorithms. In January, the CMA requested evidence from academics and industry experts on the potential harms to competition and consumers caused by the deliberate or unintended misuse of algorithms. It is also looking for intelligence on specific issues with particular firms that the CMA could examine and consider for future action. At that time, the CMA said that the research and feedback would inform the CMA’s future work in digital markets, including the new DMU.

Agreements between platforms and media companies. According to the announcement, Digital Secretary Oliver Dowden has asked the DMU to work with the U.K.’s communications regulator, the Office of Communications or Ofcom, to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers, including to ensure they are as fair and reasonable as possible. Regulators in Australia and France have been grappling with how to assist media companies in negotiating with online platforms regarding the use of their news content.

Companies: Google LLC; Facebook, Inc.; Giphy, Inc.

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