ON MARCH 11th the World Health Organisation declared covid-19 a pandemic, the Bank of England cut interest rates to 0.25% and Rishi Sunak, the chancellor, announced what then seemed like a fiscal bonanza. Another episode that day got less attention. The government accepted the recommendations of the Digital Competition Expert Panel, chief among which was to set up a “digital markets unit” (DMU), a regulator to oversee big tech companies and encourage competition online.
Then, on July 1st, the Competition and Markets Authority, a powerful regulator, released its study of the digital advertising market. It identified problems “so wide ranging and self-reinforcing that our existing powers are not sufficient to address them”. It set up a taskforce to figure out what a new regulatory framework might look like.
One purported advantage of Britain leaving the EU is that it can regulate business better. In the case of technology, this might be true. Margrethe Vestager, Europe’s competition tsar, is said to be looking at Britain as inspiration for changes to the EU’s antitrust regime. Cristina Caffarra, an expert on European competition at Charles River Associates, an economics consultancy, has argued that the country “is first in Europe to set off on an explicit regulatory experiment and articulate a detailed agenda”.
The big idea at the heart of the CMA’s work is what lawyers call “ex ante” regulation. Competition law generally works on the principle of “ex post” enforcement. Broad rules are applied across sectors; antitrust authorities investigate and fine companies that breach them. For an industry as big, rich and fast-moving as tech, this can be ineffective. It is hard to prove harm in the traditional sense, and in any case companies pay up and move on. The new regime, which complements the existing one, would make rules specific to online platforms such as Google and Facebook (and potentially Apple and Amazon). These could include forcing companies to share data with competitors, making it easier for consumers to switch platforms and mandating the separation of data from different services owned by the same firm.
The government is considering an “Online Harms Bill”, which would impose a duty of care on tech firms. A House of Lords committee recently recommended a code of practice for online political advertising. The government has also accepted recommendations to establish codes of conduct around the treatment of news media by online platforms. There is little co-ordination between these efforts, nor is anyone in government tasked with bringing them together. But many of these measures lead back to the prospective DMU, which will probably be some combination of the CMA, the Information Commissioner’s Office and Ofcom, the media and telecoms regulator. The taskforce is due to complete its work by the end of the year.
After that, politics takes over. The thing to remember, says a senior adviser to the government, is that policy wonks get excited about regulating tech companies, but most people love their products. And Brexit brings challenges, including the difficulty of imposing regulation on American tech firms at the same time as Britain negotiates a trade deal with America. Moreover, regulating online advertising seems at odds with the desire to make Britain more attractive to big internet platforms, points out Ashley Hurst, a competition lawyer with Osborne Clarke, a law firm.
The government says it is “committed to making sure that digital markets work for all”. What that vague aspiration means in practice will become clear once the taskforce finishes its work.■
This article appeared in the Britain section of the print edition under the headline “A world leader after all”