UK watchdog on Big Tech likely to remain toothless for a year

The UK’s much-anticipated technology watchdog is not expected to be given powers to police Big Tech until 2022, despite being launched this week, according to sources close to the regulator.

The government unveiled the Digital Markets Unit, which will sit within the Competition and Markets Authority and is intended to rein in the power of big tech companies, on Wednesday. The unit, first announced last year, was hailed as a “major milestone” for online market reform by Oliver Dowden, the digital secretary.

However, the new regulator will remain toothless until given powers by fresh legislation, which, according to sources close to the CMA, may not be introduced for a year or more because of the length of the government consultation process and volume of laws being considered by parliament.

Those individuals said the watchdog, which is currently operating in “shadow” form with capacity for about 60 members of staff, would be left hamstrung if powers do not follow in good time.

“The government has committed to regulating digital platforms and decided that the DMU go ahead . . . but for the DMU to start adopting codes of conduct and imposing interventions [on tech firms] they will need new powers,” said Damien Geradin, a competition partner at Geradin Partners.

In December the government announced plans to launch the DMU in shadow form in April. Although it never specified a date by which the regulator would be equipped with powers, many had hoped it would be fully operational within the year, since the government had pledged to begin the parliamentary consultation process in early 2021.

Geradin said 2022 now seemed most realistic for the launch “because the government has had so much to deal with including Brexit, the Covid-19 crisis and the online harms bill [legislation to regulate the dangers of the internet]”. A source close to the government said the timeframe was a result of the rigorous nature of the consultation process, which is yet to begin.

The plans come amid a flurry of interventions by global regulators aimed at tackling the concentrated power of a small number of technology firms.

The DMU will be responsible for enforcing a regime to govern the behaviour of Silicon Valley giants as part of a radical regulatory attack on their dominance. The regime is expected to include bespoke codes of conduct for companies such as Google and Facebook, as well as “pro-competitive” interventions such as forcing companies to share data with each other.

The CMA was given an extra £20m for the 2021/22 financial year to establish units within the agency, including the DMU. Dowden said the unit would spend its shadow period setting out the scope of its future work, including researching how rules for internet giants might work in practice.

He said he had asked the unit to “begin by looking at the relationships between platforms and content providers, and platforms and digital advertisers”.

Sources inside the CMA said that concern over the timeframe for the launch of the DMU had motivated the regulator to use its current powers to their fullest extent. Since the start of the year the regulator has launched antitrust probes against Google and Apple and is planning another against Facebook.

“The CMA is doing what it should — not staying put and waiting for the legislation,” said Geradin. “Everyone wants them to act and . . . these investigations will allow them to collect a lot of data that they can them use to inform the codes of conduct . . . 

“They don’t have the powers yet but they can use the old omens to feed the machine.”