If one of the benefits of Brexit means regulatory flexibility, then the UK’s technology policy has a lot to offer.
Three years after a reputable report on how to overhaul the UK competition regime for the online economy recommended the creation of a robust digital market unit, the government’s dithering and delays wasted an early advantage. Now further delay puts the entire policy at risk.
The legislation needed to empower the Digital Markets Unit (DMU), the new watchdog that sits in the shadow of the competition regulator, is said to be absent from the Women’s Speech. king next week.
That condemns the DMU, which the government deems fit to set up, fund and staff but not empower, crippled for at least another year.
During that time, it cannot do more than the Competition and Markets Authority can. It can observe digital markets, but has a very limited ability to reshape them. It cannot establish legally enforceable codes of conduct to prevent big tech abuses before they happen or penalize non-compliance. It would have to wait for someone to do something wrong, then go through the rigorous process of a full execution instance. Rather than looking to the future, UK policy towards big tech will remain an instrument cluster designed for the old economy.
The government has always said that it will legislate for the DMU when parliamentary time permits. However, it is hard to believe that if it cannot find time to legislate this year, it will manage to do so the next, when an election is about to break out. CMA has a reputation for attracting good people. How many people at the new tech unit will stick around indefinitely at an organization where ministers don’t seem to be a priority?
Even if this does not signal the death of the DMU but merely its delay, the government’s inaction on the legislative side is still important.
The UK has made an effort in shaping the global approach to technology regulation. Yes, the UK is a small global market. But the CMA is a reputable regulator among its peers around the world and has international influence. Had the UK gone ahead with the proposed reforms, other countries could have followed in their lead.
But in less time than the UK talks about setting up its new tech regulator, the EU has launched not one but two landmark legal pieces to rein in Big Tech. Those will guide industry obligations and relationships with governments. And if the UK does not do its own overhaul, it is likely to become increasingly dependent on EU rules, in which it has no say in changing anti-competitive behavior. global online elite.
Continued failure to legislate also risks leaving UK regulators to use the tools at their disposal more aggressively – and more uncertainly. That means more ad hoc enforcement by the CMA, expanded reviews of the Big Tech takeover, and more transactions being called in and blocked even if a connection to the UK is not needed. , as with Facebook’s attempt to acquire the Giphy online sticker library.
It should also be cause for broader concern about a misguided approach to regulation. If the reluctance to legislate, as one official suggested, is because “Conservative governments do not legislate their way to prosperity and growth”, that shows a fundamental misunderstanding of how the digital economy works and what the UK competition law improvements should be suggested by the economist. and former Obama adviser Jason Furman must have done it.
As Diane Coyle, part of the board behind the Furman report, put it, “the whole philosophy of the Furman report is to make markets work better.” It aims to lead to a less interventionist approach by clearly writing the rules of the game and reducing the structural barriers built by Big Tech, which then discourage smaller operators from innovating.
By not legislating, the government could end up with a more intrusive antitrust regime that is unsuitable for the digital economy. It won’t mean less red tape or an environment where companies can innovate unrestricted. The UK is no longer the leader in Big Tech regulation. It is on the verge of becoming a laggard.
