UK Regulator Will Have The Power To Impose Steep Fines On Big Tech

The UK’s newly established Big Tech regulator will have broad authority to punish megacorporations that it deems anti-competitive.

According to TechCrunch, the country’s Department for Digital, Culture, Media, and Sport (DCMS) has revealed that the Digital Markets Unit will have the authority to levy fines of up to 10% of a company’s worldwide annual turnover, plus up to 5% of daily turnover for each day the violations continue.

Firms will also need to make it easier to switch between platforms (such as mobile devices and social networks), move away from default apps (such as search), and gain more control over data sharing.

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Big Tech will also be required to report acquisitions to the Competition and Markets Authority prior to closing to determine whether “further investigation” is required.

The DMU could obstruct acquisitions intended to stifle competition, reducing the likelihood that the unit will have to regulate after the damage has already been done. For example, the CMA may not have ordered Meta to reverse its acquisition of Giphy.

According to the DCMS, the changes may necessitate tech behemoths notifying smaller companies when they change algorithms that could harm their operations.

Google may be required to notify stores if changes will affect search rankings, for example, while Meta may be required to notify media outlets if they will be less prominent in Facebook’s feed.

Meanwhile, app developers can expect “fairer and more transparent terms” for selling their products.

The UK also intends to follow in the footsteps of Australia and Canada by ensuring that news publishers are “fairly compensated” for online content. For example, the DMU could step in to settle pricing disputes.

While the CMA clarified that it will consult with all parties before implementing a code of conduct, it recognized the need to address an “imbalance of bargaining power” that allows online platforms to bully publishers.

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The DMU’s effectiveness will be determined by the exact codes implemented, and it does not yet have the authority promised by DCMS. It is unclear when this will occur. If the new promises hold up, they could compel major changes at large tech firms.

Apple and Google may be forced to relax restrictions on apps and operating system defaults, while Amazon and Meta may be forced to increase transparency and exercise caution when changing recommendation algorithms.

While fines based on global turnover are nothing new, the DMU’s maximum penalties are particularly severe, leaving Big Tech with little choice but to comply.