The U.K. government has published a draft bill, called the Digital Markets, Competition, and Consumers bill, that would give a new division within the independent competition regulator powers to impose huge fines against Big Tech companies for competition abuses, and also investigate and block acquisitions with greater speed.
The bill targets tech firms with at least £25 billion ($31.2 billion) in global annual revenues or £1 billion in the U.K. According to a statement, this would include Amazon, Apple, Google, Microsoft, and Meta, which generated $514 billion, $394.33 billion, $282.8 billion, $198 billion, and $116.6 billion in revenue respectively in 2022.
The Digital Markets Unit, a new regulatory body within the Competition and Markets Authority (CMA), which was created in 2020 with a mandate to promote competition and innovation in digital markets, will have enhanced enforcement powers regarding Big Tech mergers and acquisitions.
Changes to the thresholds for mergers and fines will enable the CMA “to conduct faster and more flexible competition investigations, which identify and stop unlawful anticompetitive conduct more quickly,” according to a CMA statement.
Smartphones and online shopping have profoundly changed the landscape for businesses, consumers and the foundations of a modern thriving economy, which now lie in strong consumer choice, confidence and competition.
From abuse of power by tech giants, to fake reviews, scams and rip-offs like being caught in a subscription trap – consumers deserve better. The new laws we’re delivering today will empower the CMA to directly enforce consumer law, strengthen competition in digital markets and ensure that people across the country keep hold of their hard-earned cash.
Business and Trade Minister Kevin Hollinrake said:
The proposed law, which is set to be unveiled in Parliament on Tuesday, will allow the CMA to impose fines of at least 10% of firms’ global annual revenues on companies that breach the rules. Although the law hasn’t yet been approved by lawmakers, it is widely expected to receive cross-party support.
The CMA has recently been at the center of some major Big Tech crackdowns, holding up Microsoft’s $69 billion acquisition of video game publisher Activision Blizzard with an in-depth competition investigation. It previously ordered Facebook to divest the U.S. GIF-making platform Giphy.
Katherine Kirrage, a digital competition partner at Osborne Clarke, commented that it is rare for a competition regulator to fine a company the maximum 10% level, but the risk to their reputation is a concern. “Also, it is inherent in the logic of creating these strong sanction powers that they should have a significant deterrent effect on others. The adverse PR impact of a big fine that catches the headlines shouldn’t be underestimated,” she said.
The law is intended to reduce the dominance of tech giants like Amazon, Microsoft, and Apple when it comes to online markets. These companies have faced accusations of limiting competition in a number of ways, including restricting the use of software to certain platforms and using data on their customers to boost their businesses.
The draft bill will now go through a period of consultation, during which stakeholders and interested parties will have the opportunity to provide feedback and make suggestions. The government expects to introduce the bill to Parliament later this year.
In a related development, on Monday a judge mostly sided with Apple in a legal battle with U.S. video game maker Epic Games. Epic, which had its popular Fortnite game removed from the App Store after introducing a direct payment option that broke Apple’s rules, accuses the Cupertino tech giant of harming competition in app distribution and payment processes.
The proposed Digital Markets, Competition, and Consumers bill is aimed at curbing the power of Big Tech companies, which have been accused of stifling competition and harming consumers. The bill would empower the CMA’s Digital Markets Unit to levy huge fines against tech giants for competition abuses and investigate and block acquisitions with greater speed. If the bill is approved, the UK would become the first European country to introduce such strict measures to regulate tech giants.