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CMA proposes 'Digital Markets Unit' to regulate tech giants

The DMU will work with powerful tech firms to ensure they comply with any new competition rules

8 Dec 2020

Apps for four of the world's biggest tech firms

The Competition and Markets Authority (CMA) has urged the government to create a legally binding code of conduct to regulate digital giants.

The suggestion has come with a range of proposed regulatory framework developed through the Digital Markets Taskforce, which was commissioned by the government in March.

The task force is led by the CMA and includes input from the Information Commissioner's Office, the Financial Conduct Authority and Ofcom.

"The UK needs new powers and a new approach," Andrea Coscelli the CEO of CMA said. "In short, we need a modern regulatory regime that can enable innovation to thrive, while taking swift action to prevent problems.

"To meet the new challenges of the digital age, it is essential that regulators work together. In developing these proposals, we have benefited from working alongside Ofcom, the ICO and the FCA."

If implemented, the new regime will govern tech firms with "Strategic Market Status" (SMS), which the government describes as those with substantial, entrenched market power. A new body, the Digital Markets Unit (DMU), will work with these powerful tech firms to ensure they comply with any new rules.

The code of conduct will be tailored to each firm to shape the behaviour of powerful digital companies and the DMU will wield a "range of powers" to address any concerns and potential penalties.

The unit will also have "pro-competitive interventions" which can be used to address the sources of market power, such as Google with other search engines. There will also be enhanced merger rules that will allow the CMA to apply closer scrutiny to transactions involving SMS firms.

"The dominance of a few major players in the digital market impacts on people's data protection rights when they use these platforms," said Information Commissioner, Elizabeth Denham.

"Our involvement with the Taskforce reflects the importance of safeguarding these rights and ensuring individuals have greater control over their personal information."