CMA To Restrict Powers of US Tech Giants Google and Facebook in the UK

Summary

  • The UK is going to impose a new competition regime in 2021 that will restrict the power of the tech giants such as Google and Facebook
  • Under the new code, only those firms will be impacted which are believed to have a strategic market status
  • CMA said Facebook and Google are the biggest players in the digital advertising market, constituting about 80 per cent of the £14 billion spent in 2019

In a bid to bring a level playing field for smaller firms and curb the unfair market for consumers, the UK is going to impose a new competition regime in 2021 that will restrict the power of the tech giants such as Google and Facebook.

The new code of practice on technology firms will be implemented by a dedicated Digital Markets Unit within the Competition and Markets Authority (CMA), an antitrust body in the UK. In fact, this year, the CMA had said that new laws were necessary in order to monitor big tech giants.

Under the new code, only those firms will be impacted which are believed to have a strategic market status, even though it is yet not clear what this means and the types of rules that are going to be implemented.

It is worth noting that advertising revenues that generate profits for Facebook and Google come under the eye of antitrust vigilance due to recurring complaints from the media corporations as advertisements have increasingly shifted their preference from print to the web over the last decade. As per CMA, Facebook and Google are the biggest players in the digital advertising market, constituting about 80 per cent of the £14 billion spent in 2019.

Meanwhile, Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, said tech giants such as Facebook and Google play a big role in contributing to the growth of the UK’s economy and also are useful for daily lives. However, these two tech giants have created a sort of hegemony in the digital world which restricts innovation and leads to higher advertising spending and limited choice for consumers.

Sharma added that the new competition regime would ensure fair competition in the digital market space and enable small firms to retain their position in the market. This would provide ample choices for consumers.

Also read: CMA Calls to Rein in Market Powers of American Tech Giants Facebook And Google

On similar lines, Oliver Dowden, the secretary of the UK’s Digital Secretary, said there was growing concern that only a few companies are running the show and the power is only concentrated with them. This was denting the growth outlook, unique, innovative ideas and impacting business and people to a large extent.

In the meantime, the two US tech giants Facebook and Google have said they are happy to work with the UK government and the regulator on a digital advertisement. They added that they are also happy to provide users with bigger control over their data and the advertisements.

 


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