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Tuesday, May 24, 2022

UK targets Big Tech with new competition rules

The United Kingdom announced plans on Friday to create new rules that would limit the power of tech giants like Google and Facebook.

The announcement comes after the country’s competition authority published a report earlier in the year that warned these companies had become overly dominant, particularly in the online advertising industry, and that greater regulatory checks were required to give smaller firms the ability to compete.

London’s move — it will create a new team within the U.K.’s Competition and Markets Authority, the local regulator, to oversee the writing of new rules by the end of 2021 — comes before the European Union will publish an overhaul of its own antitrust standards on December 9 to give the bloc’s enforcers greater powers over dominant firms.

American lawmakers similarly demanded further limits on Silicon Valley’s biggest names in a recent report, while U.S. federal and state agencies have either filed, or are expected to file in the coming weeks, lawsuits against Google and Facebook over accusations that they abused their online dominance for their own gain. Both companies deny any wrongdoing.

“There is growing consensus in the U.K. and abroad that the concentration of power among a small number of tech companies is curtailing growth of the sector,” Oliver Dowden, the country’s digital minister, said in a statement. “It’s time to address that and unleash a new age of tech growth.”

Despite the bullish statements, the U.K. must tread carefully between pushing for greater competition rules on companies that have a significant footprint in the country and enticing these firms to continue to invest after the Brexit transition deadline ends on December 31.

London’s decision to pass new digital tax rules, which almost exclusively targeted American tech giants, has already raised eyebrows with tech executives and received pushback from American lawmakers, just as the U.K. pushes ahead with a potential free trade deal with the U.S. The country is similarly mulling greater responsibilities for social media companies over what is published online.

As part of the U.K.’s announcement Friday, a new digital market unit will be established in April within the country’s antitrust regulator that will draft proposals on what obligations large digital companies have when operating in the online world. A consultation is expected to be held during 2021, and the U.K. government will then legislate, likely in 2022.

The U.K. competition authority, in its earlier report, said both Google and Facebook had used their dominance to collect people’s data and nudge their behavior towards their own services over those of rivals. It had called for new rules to force the search engine to open up its online advertising data to rivals, and to push the social networking company to be more easily connected to other platforms.

“Only through a new pro-competition regulatory regime can we tackle the market power of tech giants like Facebook and Google and ensure that businesses and consumers are protected,” Andrea Coscelli, head of the U.K.’s competition agency, said in a statement.

In a statement, Ronan Harris, Google’s managing director for the U.K. and Ireland, said the company looked forward to working with the regulator’s new digital markets unit. A spokesman for Facebook declined to comment.

Like other countries, Britain is squarely focused on tech giants’ use of people’s personal data — digital information that has already led the German federal antitrust enforcer to claim that Facebook abused its dominant position when collecting such data. The company and the German regulator are now pitched in a lengthy legal battle over the issue.

As part of the U.K. proposals, the local competition agency’s new digital market unit will also write rules to oversee the commercial arrangements between large digital platforms and publishers that rely on these services to generate income from their online content, according to the British government.

Many media outlets, particularly in France and Germany, have been longstanding critics over how the likes of Facebook and Google potentially misuse their material for the tech giants’ own financial gain. In response, the companies have earmarked hundreds of millions of euros, globally, to help publishers to digitize, but reject claims they do not fairly pay outlets when their content is displayed in search queries or social media posts.

“The dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers,” Alok Sharma, the U.K.’s business secretary, said in a statement.

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