UK’s digital markets regulator gives flavor of rebooted rules coming for Big

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The UK’s competition authority has fleshed out new details of how it plans to wield long anticipated powers, incoming under a reform bill that’s still in front of parliament, to proactively regulate digital giants with so-called strategic market status (SMS) — saying today that, in the first year of the regime coming into force, it expects to undertake 3-4 investigations of tech giants to determine if they meet the bar.

Of course the regulator isn’t naming any names as yet but it’s a fair guess that Apple and Google (aka Alphabet) will be towards the top of this investigation list.

The CMA previously found the pair’s gatekeeping of their respective mobile app stores creates substantial competition concerns. And, publishing a mobile market study on the duopoly back in December 2021, it wrote that its work “so far” suggests both would meet the incoming criteria for SMS designation for several of their ecosystem activities.

Tech giants that end up being subject to the UK’s special abuse regime can expect to face interventions that prevent them from preferencing their own products, the CMA also confirmed today.

Additionally, it said they may be required to provide competitors with greater access to “data and functionality” than their commercial interest might prefer.  Interoperability could also be imposed on designated tech giants, the CMA suggested, as well as mandates that they trade on fairer terms. Algorithmic transparency could be another demand made of them by the new digital markets regulator.

The need to arm the Competition and Markets Authority (CMA) with its own ex ante playbook to tackle the market muscle of Big Tech has been on the policymaking agenda in the UK for years. In November 2020 ministers confirmed their plan to set up a “pro-competition” regime targeting tech platforms with major market power with the goal of tackling some of the tipping seen in digital spaces, such as online advertising.

A key component of the plan for the new Digital Markets Unit (DMU), set up within the CMA, was that it would be empowered to tackle specific problems with bespoke interventions tailored to each platform. The reform also contained teeth, allowing for penalties of up to 10% of annual turnover for confirmed violations.

Three+ years ago, when the government first committed to the plan to tackle platform power, it looked pioneering. However the turmoil in UK politics of the past several years contributed to delaying progress on enacting the reform. As a consequence the UK 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.

Returning to the UK, the domestic mood music changed again last April when the government, under prime minister Rishi Sunak, picked the ball back up and introduced the Digital Markets, Competition and Consumers Bill to parliament. Then, earlier this month, ministers wrote to the CMA asking it to set out a roadmap for implementing the future regime. Albeit, given the detail of the legislation remains under discussion by lawmakers, the ask was only for 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 UK once the regime is up and running.

In the overview document, the regulator writes that the harms it will choose to focus on will be driven by a set of “prioritisation principles”. The text goes on to set out a list of 11 “operating principles” (see graphic below) it says will feed its decision-making on which of the myriad possible Big Tech abuse battles to pick — including saying it will have a focus on always applying a pro-competition lens; selecting for maximum impact; and seeking to move quickly (and repair harms, to coin a phrase) as issues develop.

“We will think broadly about consumer benefits,” the CMA also writes, fleshing out its thinking on principle 2 (aka impact). “As well as the price of goods and services (which in some digital markets is zero), consumers may also value choice, security, privacy, innovation, and their overall experience (for example, how much advertising they are exposed to).”

A similar ex ante digital competition reform that came into force in the EU last year — aka, the Digital Markets Act — takes a more prescriptive approach to prohibitions and obligations, by literally setting out a list of ‘dos and don’ts’ for regulated giants. Six tech giants have been designated as so called “gatekeepers” under the bloc’s…