Reports that the government has backtracked on strengthening the role of the UK’s tech regulator has sparked mixed reviews from the City today.
According to the Financial Times, the new legislative programme is expected to exclude the planned statutory footing and enhanced powers for the Competition and Markets Authority’s (CMA) digital markets unit (DMU).
Not only will the decision reduce the unit’s ability to enforce codes of conduct and impose fines as first planned for the regulator, but it has also been framed as a heavy blow for a London start-up and innovation scene.
It is understood that some business leaders had pinned hopes on the digital markets unit as tempering the increasingly activist stance taken by the CMA.
This is especially true for free market commentators who have criticised the watchdog’s block of Facebook’s recent acquisition of Giphy , as well as its increasing involvement in City M&A deals.
Policy Director at The Coalition for a Digital Economy Camilla de Coverly Veale told City A.M. earlier today: “Whether or not the DMU plans were perfect, the expertise they add is critical and whatever comes next, the momentum behind building deep knowledge and understanding for critical markets in the future can’t be lost.”
However, some have welcomed the government’s stance on DMU power.
“Far from protecting competition and innovation, this [digital markets unit] would be more likely to lead to a decline in investment in tech, threatening economic growth and the development of digital services that consumers value”, head of regulatory affairs at the IEA Victoria Hewson told City A.M.
Contrasting this to Europe’s new highly interventionist Digital Markets Act, she said: “The UK has an opportunity here to diverge from the EU in a very positive, free market direction”.
For Sam Dumitriu, Research Director at The Entrepreneurs Network, this can be framed as an opportunity for the UK to learn some serious lessons, as opposed to rushing through legislative powers.
“I think it would be helpful for policymakers to watch Europe. It’s better to be right than first in this case”, Dumitriu said.