The Government has announced that the tech giants, such as Facebook and Google, will be subject to a new regime to “give consumers more choice and control over their data, help small businesses thrive, and ensure news outlets are not forced out by their bigger rivals”. A dedicated Digital Markets Unit, which will be set up within the Competition and Markets Authority, will work closely with regulators, including Ofcom and the Information Commissioner’s Office, to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market, such as Google and Facebook, to ensure consumers and small businesses are not disadvantaged.

The Government says that there is growing consensus in the UK and abroad that the concentration of power amongst a small number of tech companies is curtailing growth in the tech sector, reducing innovation, and potentially having negative impacts on the people and businesses that rely on them.

The new code will set clear expectations for platforms that have considerable market power, or “strategic market status”, over what represents acceptable behaviour when interacting with competitors and users.

Under the new code, platforms including those funded by digital advertising, could be required to be more transparent about the services they provide and how they are using consumers’ data, to give consumers a choice over whether to receive personalised advertising, and could be prevented from placing restrictions on their customers that make it hard for them to use rival platforms. The new Unit, which will begin work in April 2021, could be given powers to suspend, block and reverse decisions of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance.

The Government says that the proposals could also help give small businesses fair access to platform services, including digital advertising, allowing them to grow their business’ online presence. The code could be used to ensure platforms are not applying unfair terms, conditions or policies to certain business customers, including news publishers.

The new code will also govern commercial arrangements between publishers and platforms to help keep publishers in business, helping enhance the sustainability of high-quality online journalism and news publishing in the UK.

The Unit will be informed by the work of the Digital Markets Taskforce, which was set up earlier this year to provide advice to the Government on the potential design and implementation of pro-competitive measures, including the methodology which will determine what companies should be designated as having strategic market status, and how a regime would work in practice.

The Government set out its plans to take forward the development of the new Unit and code of conduct in its response to the market study that it asked the CMA to produce on online platforms and digital marketing (see item below). The Government will consult on the form and function of the Digital Markets Unit in early 2021 and legislate as soon as parliamentary time allows. To read the Government’s announcement in full, click here.