By Ian Brown. Last updated: 30 December 2022
Following a government-commissioned independent review of digital competition, and an extensive 2018/19 market study by the Competition & Markets Authority (CMA) into online platforms and digital advertising, the UK government consulted on potentially significant legal changes to the competition law regime (with many similarities to the EU’s Digital Markets Act).
In anticipation, the CMA has set up an internal Digital Markets Unit (DMU), as well as a Digital Regulatory Cooperation Forum with the communications and financial services regulators and data protection authority. However, the legislation has been yet-further delayed, until late 2023. Until then, the CMA chief executive has told the House of Lords Communications and Digital Committee it can take action using existing powers.
The UK is also continuing to develop its pioneering Open Banking programme (with similar programmes in dozens of other jurisdictions, including Brazil and India), in which the CMA has required the nine largest retail banks to jointly create a series of technical interfaces (Application Programming Interfaces or APIs) to enable competitors to access customer data and initiate payments (with their explicit permission) to offer interoperable services. There are now over 4m users (in a country of around 67m people), with hundreds of “fintech” firms accredited to participate. The government is developing related Open Finance, Open Communications and Open Energy programmes.
Civil society advocacy
UK-based civil society groups such as Privacy International, Article 19 and Open Rights Group have been campaigning (also in Brussels) for strong interoperability requirements for gatekeepers/firms with “Systemic Market Status”, and for social media platforms to unbundle their services so that users can choose different recommendation/timeline curation providers, giving them the option of services with stronger freedom of expression and privacy protections. Article 19 has also emphasised the importance that tests of ‘harms to competition’ includes ‘harms to consumers.’
These groups have responded to government’s consultation on legal reform, emphasising the importance of interoperability requirements for firms with “systemic market status”, consultation with civil society on remedies, DMU redress powers, recognising the importance of human rights, and assessing social and cultural as well as economic impacts.
Key enforcement actions
The CMA has ordered Meta to reverse its acquisition of GIPHY, which it found could cause a substantial lessening of competition in the supply of display advertising and social media service. It has cleared Meta’s acquisition of Kustomer, and is also investigating its use of advertising and single sign-on data in its classified ads and online dating services.
In March 2021, the CMA opened an investigation into Apple’s terms and conditions relating to its app store, particularly those requiring use of its own payment service. The CMA also “continues to coordinate closely with the [European Commission], as well as other agencies” to investigate this issue. In June 2021, it launched a market study into mobile ecosystems, and potential consumer harm within four themes:
- Competition in the supply of mobile devices and operating systems.
- Competition in the distribution of mobile apps.
- Competition in the supply of mobile browsers and browser engines.
- The role of Apple and Google in competition between app developers.
In November 2022, the CMA decided to undertake a full market investigation. At the end of this process, it has powers to impose sweeping remedies on market participants if they are justified by evidence of harm to consumers.
In parallel with the European Commission, the CMA has launched an investigation of Google and Meta’s “Jedi Blue” agreement. The CMA chief executive stated: “We will not shy away from scrutinising the behaviour of big tech firms while we await powers for the Digital Markets Unit.”
The CMA has accepted Google’s commitments relating to their removal of third-party cookies from their web browser Chrome, and is “is working closely with the Information Commissioner’s Office (ICO) to oversee the development of the proposals, so that they protect privacy without unduly restricting competition and harming consumers.” According to the CMA, the commitments include:
- “A more transparent process than initially proposed, including engagement with third parties and publishing test results, with the option for the CMA to require Google to address issues raised by the CMA or third parties;
- “Google will not remove third-party cookies until the CMA is satisfied that its competition concerns have been addressed. If the CMA is not satisfied that its competition concerns have been addressed, the CMA may take further action (i.e. re-open its investigation, impose interim measures or proceed to a decision);
- “Commitments to restrict the sharing of data within its ecosystem to ensure that it doesn’t gain an advantage over competitors when third-party cookies are removed; and commitments to not self-preference its advertising services;
- “A Monitoring Trustee will be appointed to work alongside the CMA to ensure the commitments are monitored effectively and Google complies with its obligations. This appointment is expected to be made shortly.”
In February, the CMA designated Amazon as a grocery retailer, meaning the firm must comply with the Groceries Supply Code of Practice, ensuring retailers “treat their suppliers fairly. For example, it restricts firms from making changes to supply contracts at short notice. It also requires retailers to give an appropriate period of notice if they no longer want to use a supplier and provide reasons”.
The CMA has also published its recommendations on the future of Open Banking scheme, which now has over 5 million users and is expected to be used by 60% of the UK population by September 2023. It will establish a joint regulatory oversight committee with the Financial Conduct Authority, Payment Systems Regulator, and the UK government’s Treasury. The recommendations are that the future Implementation Entity will:
- “have independent and accountable leadership, with a majority of independent directors…
- “have a clear purpose articulated by the Board;
- “be adequately resourced to carry out its functions through a more broadly-based and sustainable funding model;
- “effectively serve the interests of consumers and SMEs, including consideration for how these groups will be represented in the governance of the entity;
- “be sustainable and adaptable to the future needs of the sector;
- “have a system to effectively support the monitoring and enforcement of the Retail Banking Market Investigation Order 2017.”
Acknowledgment: this update was commissioned by Open Society Foundations