The prime minister wants the UK to be a science and tech superpower but we have a big problem: our digital markets don’t work properly. The financial clout and sheer computing power of the Californian tech giants is creating significant, often insurmountable, barriers to entry for alternative providers.
New tech companies, particularly in the UK, are finding it increasingly difficult to get a foothold: Gener8, a start-up business which gives users control of the data about us that gets collected every time we go online, price-comparison firm Kelkoo and a wide range of app-based firms were among businesses giving evidence to my committee about the challenges they face to establish themselves, especially when trying to create a new digital market.
Those who were once the disrupters — from Google to Amazon to Meta — are now firmly entrenched and, understandably, trying to keep it that way. We shouldn’t penalise these businesses because of their size: their success and innovation create business opportunities, providing products and services consumers love. But that doesn’t mean they should control the way markets develop and who else gets the chance to succeed. We should insist on a level playing field where everyone has a fair chance to compete, so consumers benefit. If markets aren’t creating that on their own, governments should step in.
That’s why I have written to the prime minister urging him to stick to the government’s plans to regulate digital markets. The Digital Markets, Competition and Consumer Bill as drafted would put competition at the heart of digital markets with an empowered Competition and Markets Authority ensuring established players can’t use their dominance in one part of the digital market — for example, search — to damage the prospects of a potential competitor in others, such as online shopping.
But there is growing pressure on No 10 to weaken the bill, particularly to make it easier for regulated firms to challenge CMA decisions. Diluting the bill now would be a mistake. The measures the government originally proposed are balanced and proportionate. They allow the big firms to continue to operate and innovate while ensuring they do not use unfair tactics to suppress competition and stifle new challengers before they’ve had a chance to get going.
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The key thing is to make sure this is done fairly. The UK’s new competition regime is different to Europe’s and considered better by big tech because it is more flexible. But it will only work if the most dominant players participate in the process from the start, to help the CMA decide best how strategic markets, such as digital advertising (critical to all businesses including newspapers), should work so that all players get fair terms.
That’s where the process for challenging the regulator’s decisions comes in and why it’s so important. The current proposal for a judicial review appeals process is the right one. It is quick, fair, supports the non-adversarial nature of the regulatory regime and provides certainty. It allows a proper assessment of the regulator’s decisions and means the tech giants could appeal against them on the basis of failures of process but not simply because they disagreed with the decision.
We have heard concerning reports that the government may water this down, following intense lobbying. The alternative, apparently now being considered, would allow challenges to the courts, asking them to reopen and relitigate the regulator’s decisions. This is a lawyer’s charter, opening the possibility of lengthy and expensive legal challenges. Every time regulatory processes become legal battlefields the advantage is always with those with the deepest pockets. And there aren’t many deeper pockets than those to be found in Silicon Valley.
A key priority for the bill should be to establish regulations that are fair and encourage UK businesses to compete and grow. Keeping the judicial review appeals process is a key part of that. This is a bill the government got right the first time, it must not now second-guess itself. The PM should stay the course and stand up for what’s needed.
Baroness Stowell of Beeston is chairwoman of the House of Lords Communications and Digital Committee
