By Ian Brown. Last updated: 13 October 2023
Following a government-commissioned independent review of competition in digital markets, and an extensive 2018/19 market study by the Competition & Markets Authority (CMA) into online platforms and digital advertising, the UK government is making significant legal changes to the competition law regime (with many similarities to the EU’s Digital Markets Act). It introduced the Digital Markets, Competition and Consumers Bill in Parliament in April 2023, which is expected to come into force around a year later. The only element of significant controversy over the bill is whether CMA decisions under it will be subject to a (weaker) “judicial review” standard, or a review “on the merits”, argued for by technology companies, which could lead to much longer court appeals.
In anticipation of this legislation passing, 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. Until then, the CMA chief executive 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 7m users (in a country of around 68m people), with hundreds of “fintech” firms accredited to participate. The government is developing related Open Finance, Open Communications and Open Energy programmes, with powers allowing the government to require businesses to make customer and business data available (with customer consent) to third parties in the Data Protection and Digital Information (No. 2) Bill passing through Parliament.
Civil society advocacy
UK-based civil society groups such as Privacy International, Article 19 and Open Rights Group responded to the 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 April 2023 the CMA initially blocked Microsoft’s acquisition of Activision, finding it would “result in a substantial lessening of competition in the supply of cloud gaming services in the UK, due to vertical effects resulting from input foreclosure” It obtained substantial concessions from Microsoft, approving the amended acquisition on 13 Oct. 2023 (with cloud streaming rights outside the European Economic Area sold to Ubisoft).
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, the CMA launched a market study into mobile ecosystems. In November 2022, it 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. The CMA also has ongoing investigations into the Adobe/Figma acquisition and the cloud infrastructure market.
In parallel with the European Commission, the CMA 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.” It has since merged the investigation into a second investigation into potential anticompetitive conduct by Google in the adtech market.
The CMA has accepted Google’s commitments relating to its removal of third-party cookies from its 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 2022, the CMA designated Amazon as a grocery retailer, meaning the firm must comply with the UK’s 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”.
Acknowledgment: this update was commissioned by Open Society Foundations