The new rules of fair play for the largest technology companies would make it easier for people to switch between telephone operating systems and mean that smaller companies will be warned about changes to the algorithm.
There are plans to fine up to 10% of global turnover for breaches, and top tech bosses will face severe penalties if companies do not follow the rules.
A new supervisor will be able to provide fair prices for content in disputes between powerful platforms and content providers, such as news publishers and advertisers.
Small businesses will be protected from predatory practices and consumers will have more choice and control over their online experiences as the government today sets out its final vision of how the new digital market regulator will increase competition to boost economic growth and innovation.
Most companies in the UK now rely on powerful technology companies to ensure that customers find their business online. These companies control key online gateways for millions of Internet users and give preference to their own applications and browsers.
They can also set their own prices for the online services they provide to the business without any challenges that can be passed on to consumers.
The impact of weakened competition is strong – the Competition and Markets Authority estimates that Google and Facebook have made unnecessary profits in the UK of 2.4 billion pounds in 2018 alone – harming consumers through higher prices.
In response to its consultation released last year, the government today sets out plans to give the Digital Markets Division (DMU) legal powers to enforce competition rules and balance the technology giants’ relationship with consumers and businesses. so that they are better protected from unfair practices.
DMU is a new security guard to make sure that technology companies do not abuse their market power. The proposals are designed to make it easier for people to switch between Apple iOS and Android phones or between social media accounts without losing their data and messages.
Smartphone users could get more choice of which search engines they have access to, more choice of social media platforms as new entrants enter, and more control over how their data is used by companies.
Tens of thousands of SMEs in the UK will get a better deal than the big technology companies they rely on to trade online.
Technology companies may need to warn smaller companies about changes in their algorithms that drive traffic and revenue.
The measures will also ensure that news publishers can generate revenue from their online news content and receive fair pay for it, giving the DMU the power to intervene to resolve price disputes between news outlets and platforms.
Application developers will be able to sell their applications on fairer and more transparent terms.
More competition in digital markets will create incentives for Internet companies to provide better services.
The optional DMU, launched optionally by the Competition and Markets Authority (CMA) last year, will have the power to identify some of the world’s most powerful companies with “strategic market status”.
The regulator will impose new customized codes of conduct on how a handful of companies dominating digital markets must treat their consumers and other companies fairly, with severe sanctions for those who disregard the rules. According to these binding requirements for behavior, companies must ensure that consumers have open choices about the digital services they use.
For example, the DMU will be able to stop companies from restricting users to pre-installed software on their devices, making it easier for smartphone users to choose which search engine or messaging app to use. People will be given more decision-making power over how their data is used and processed by technology companies – for example, by giving up targeted personalized advertising.
Large technology companies under the new regime will have to meet the regulator’s clear expectations of trust and transparency – such as informing businesses using their services of significant changes that could affect them.
For example, search engines have tremendous control over which sites users can find. Any change in their algorithms can mean that traffic is diverted from certain sites and businesses, which can have a negative effect on their revenue.
The DMU will also intervene to address the root causes of market dominance. Potential interventions include forcing companies with strategic market status to share more data with smaller competitors to help them overcome the advantages of larger companies. The requirements will also determine how dominant companies should trade with content providers, such as news publishers.
The DMU will have the power to resolve price disputes so that news providers are paid fairly for their online content. This could increase the bargaining power of national and regional newspapers and force social media platforms to be more transparent about how publishers position their platforms and what algorithms are used.
The DMU will have an arsenal of sanctions to address non-compliance, including fines of up to ten percent of annual global turnover and additional penalties of five percent of daily global turnover for each day the violation continues.
It will be able to stop, block and reverse the behavior of companies that violate their requirements for behavior, ordering them to take specific steps necessary to resolve the violation. Senior managers will face civil sanctions if their companies fail to properly engage with information requests.
Under the new “light touch” rules, companies with strategic market status will have to report on the acquisitions before they can complete, so that the CMA can carry out an initial merger assessment to determine if further investigation is needed.
Only a small number of companies with significant and established market power in the United Kingdom will be identified with strategic market status. This will ensure that the regime holds the most powerful companies accountable for their behavior.
The government will determine digital activities and behavioral requirements for companies within the regime when presenting the legislation.