Right-wing think tank claims digital markets bill is a ‘recipe for disaster’
Proposed legislation to regulate digital markets is a “recipe for disaster” and risks spooking tech companies by handing Britain’s competition watchdog unbridled power, according to a new paper by the Institute of Economic Affairs (IEA).
The right-wing think tank has today published a paper which warns the Digital Markets, Competition and Consumers bill (DMCC) will scare off investment in the UK’s bubbling tech scene.
The UK regulator, the Competition and Markets Authority (CMA), is “being given extreme powers without accountability,” claims Matthew Lesh, author of the paper and director of public policy and communications at the IEA.
A government spokesperson said they reject the claims.
“The UK is already the best place to invest in tech in Europe, as the third economy in the world to have built a $1 trillion tech sector, backed by our unwavering support like record-breaking investment and global advocacy.
During 2022, UK tech companies raised £24bn in funding, above France and Germany levels combined, according to figures from the Digital Economy Council.
“Far from stifling growth, the Digital Markets Bill will unleash a new wave of innovation and make sure every tech business has the opportunity to succeed.
“Under this Bill, our reforms will rebalance the market and level the playing field to deliver the best outcomes for consumers and drive innovation in tech.”
One of the key points of contention enveloping the bill is that it would give the CMA powers to intervene with any company before it had proved consumer harm.
The IEA argues this could hand the body sweeping authority over a swathe of digital industries but the government say the watchdog will only take action “where there is evidence of anti-competitive behaviour or unfair trading practices.”
Lesh added the DMCC, currently weaving through parliament, is a “recipe for disaster for millions of British users” because, he claims, it chokes innovation.
“It goes much further than the EU’s regime, the Digital Markets Act, risking the scaring away of investment and the loss of innovative features and products,” he said.
However, executive director of the Coalition for App Fairness, a US-based group campaigning for ‘fairer inclusion on Apple’s App Store’, Rick VanMeter, said: “Competition in any industry delivers innovation, lower prices, and other consumer benefits,” .
“Any argument claiming the pro-competition DMCC Bill would do the opposite defies basic logic.”
He added the government should stand its ground against “flimsy arguments made by Big Tech and their allies.”
“The DMCC Bill will ensure a level playing field so that dominant companies can no longer abuse their outsized market power to squash competition, hinder innovation, and hurt small businesses,” VanMeter said.
The bill also raises concerns about its ‘judicial review’ standard, which some argue limits the ease of contesting CMA decisions.
Richard Fuller, Conservative MP for North East Bedfordshire, described the powers as “too broad, too ill-defined, and too restrictive to challenge”.
The IEA’s paper goes as far as saying it may best to withdraw the bill from parliament entirely.
Other proposed ‘solutions’ include reviewing the merits of CMA decisions, narrowing the scope of its powers, and requiring proof of consumer harm before intervention.
Conservative MP Stephen Hammond, who is standing down at the next election, said the government should revise the DMCC bill to define the CMA’s powers more tightly and ensure they are properly held to account.
“The government should rethink this legislation and to find an alternative to the Digital Markets Unit which should support, rather than stifle, British tech innovation.”
Authors of the paper also include Dirk Auer and Lazar Radic from the International Center for Law and Economics (ICLE).