The government is ready to abandon its plans to give legal powers to the Competition and Markets Authority (CMA), according to a report by FT.

In 2020, the government announced plans to strengthen the regulator, which would allow it to directly impose rules on technology companies operating in the UK and fine them up to 10% of their turnover if those rules are violated.

A shadow department called the Digital Markets Division (DMU) has been set up within the CMA, with a staff of 60 in preparation for the promised new powers. This unit is working on existing investigations, including the takeover of Giphy by Facebook and the alleged restrictive practices of Google and Apple with their app stores.

whatever FT reports that the government is backing down of these plans and that the Queen’s speech on 10 May will not contain any mention of additional powers for the CMA. Without legal provisions, the supervisory body will not be able to impose new rules or fine technology companies, remaining limited to making recommendations to parliament.

Julian Knight, chairman of the Commons Committee on Digital Technology, Culture, Media and Sport, told FT that the lack of new legislation would be a hammer blow to the UK’s ability to regulate the technology sector.

If the report is accurate, it would mean that the United Kingdom is moving in the opposite direction of the EU, which in recent weeks has negotiated new rules to limit the market power of major online platforms through the adoption of the Digital Market Act and the Digital Services Act.

The DMA, which comes into force later this year, aims to facilitate the entry of small and medium-sized technologies into markets currently dominated by technology giants by tackling anti-competitive practices. Meanwhile, the DSA, which has yet to pass through the European Parliament and the Council, will regulate online advertising and content hosted by online providers and social media companies. Both are backed by substantial fines.

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