Monday 19 October 2020 12:41 pm

UK watchdog ramps up pressure on tech giants as it sets one-year ultimatum

The UK competition watchdog has urged the government to step up plans for a new digital regulator as it warned it is preparing to take action against tech giants such as Facebook and Google.

Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA), said his organisation was “actively considering” potential enforcement cases in the digital sector.

Ministers are set to appoint media watchdog Ofcom as the UK’s first internet regulator, and the CMA is leading a digital markets taskforce to advise on the new regulatory regime.

But Coscelli has ramped up pressure on the government to finalise its new tech regulation, warning that the competition watchdog was prepared to wait one year before intervening alone.

“Plan A is to have a regulatory framework,” he said in an interview with the Financial Times. “If [within a year] there is little action because of Covid-19 and Brexit then we would certainly do something ourselves directly — that is plan B.”

In July the CMA published its findings from a year-long study into online platforms and the digital advertising market, which found that large tech firms such as Google and Facebook had built an “unassailable market position”.

The study concluded that the companies’ huge user bases served to weaken competition, drive up prices for consumers and act as a “brake on innovation”.

However, the watchdog opted not to launch investigations into the so-called duopoly, stating it would first complete its work with the government through the digital markets taskforce.

Nevertheless, Coscelli has insisted that the CMA will be “increasingly active” in competition enforcement in the digital sector over the coming years, especially after the UK has left the EU in January.

In addition to a code of conduct and competition enforcement, authorities are considering a merger regime for acquisitions by companies with so-called strategic market status.

“We are considering whether the evidence supports a policy justification for such a regime, based on the particular features of digital markets that increase the risks of consumer harm arising from acquisitions by particularly powerful companies, and the heightened risks of under-enforcement,” Coscelli said.

It comes a week after EU regulators drew up a “hit list” of around 20 tech giants they have earmarked for curbs on market power.

The US antitrust committee has also drawn up a roadmap for a potential break-up of large tech firms after accusing them of abusing their market power.