New UK Body Launched to Regulate Digital Markets

A newly established public body in the UK has begun operations today. Its primary function is to oversee and regulate major companies within the digital sector. This initiative aims to foster a competitive online environment and empower consumers with greater control over their data and more choices in digital services.

Background and Establishment of the DMU

The Digital Markets Unit (DMU), initially announced in November of the previous year, emerged from a series of market reviews and studies. These investigations highlighted concerns regarding the increasing concentration of power within digital markets. While the DMU currently lacks formal legal authority, the government intends to consult on the design of a new “pro-competition regime” this year. Legislation to grant the DMU statutory powers will follow as parliamentary schedules permit.

The growing market influence of advertising technology companies like Facebook and Google is a significant factor driving this regulatory development.

Initial Focus and Objectives

The unit’s initial task involves exploring the feasibility of establishing codes of conduct. These codes would govern the interactions between digital platforms and third parties, such as small businesses. These businesses depend on these platforms for advertising and reaching their customer base. This work will contribute to the development of future digital legislation.

Lawmakers in the European Union are also addressing the role of powerful online intermediaries. They proposed legislation late last year, mirroring the UK’s efforts to create a regulatory framework that ensures fair interactions between large platforms and smaller businesses operating within their ecosystems.

A Sector-Neutral Approach

The UK government has stated that the DMU will adopt a sector-neutral approach. It will examine platforms across various digital markets with the goal of promoting competition. The unit will collaborate with Ofcom, the communications regulator, which has been designated to oversee social media platforms under upcoming legislation – known as the Online Safety Bill.

While the Online Safety Bill addresses a broad spectrum of online harms, including bullying and hate speech, the DMU’s focus will be on the business and consumer impacts that also affect competition in digital markets.

Examining Relationships Between Platforms and Content Providers

The secretary of state for digital has tasked the DMU with collaborating with Ofcom to develop a code of conduct governing the relationships between platforms and content providers, such as news publishers. The aim is to ensure these relationships are fair and reasonable.

This indicates the DMU will closely analyze recent legislation enacted in Australia. This legislation mandates platforms to negotiate with news publishers for the reuse of their content.

Collaboration and Enforcement

The head of the UK’s Competition and Markets Authority (CMA), where the DMU is situated, has previously indicated a “sensible” approach to Australia’s model of mandatory arbitration if commercial negotiations between tech companies and publishers fail.

The DMU will also work in conjunction with the CMA’s enforcement division. This division is currently conducting several investigations into tech giants, including Apple and Google, and is reviewing Facebook’s acquisition of Giphy.

Working with Other Regulators and International Partners

The DMU will collaborate with other UK regulators, including the data protection watchdog (the ICO) and the Financial Conduct Authority. Recognizing the global nature of digital competition, the unit will also coordinate with international partners. Discussions are already underway through bilateral engagements and as part of the UK’s G7 presidency.

To foster consensus, the Digital Secretary will host a meeting of digital and tech ministers in April. The goal is to improve information sharing and align regulatory and policy approaches.

Leadership of the DMU

Will Hayter will lead the DMU in an interim capacity, starting in early May. He previously worked at the Cabinet Office on Brexit transition policy, as well as at the CMA and Ofcom, gaining extensive experience in regulatory policy.