UK to abandon plans to give watchdog powers to regulate big tech, report

Plans to grant CMA new statutory powers likely to be ditched

The government is set to abandon plans to grant statutory powers to the Competition and Markets Authority (CMA), according to a report by the FT.

In 2020, the government announced plans to beef up the regulator which would have allowed it to directly impose rules on tech companies operating in the UK, and to fine them up to 10% of their turnover if those rules were breached.

A shadow department called the Digital Markets Unit (DMU) was set up within the CMA and staffed with 60 employees in preparation for the promised new powers. This unit has been working on existing investigations including Facebook's takeover of Giphy, and Google's and Apple's allegedly restrictive practices with their app stores.

However, the FT reports that the government is backing away from these plans, and that the Queen's Speech on May 10th will contain no mention of additional powers for the CMA. Without statutory provisions, the watchdog will be unable to impose new rules or fine tech firms, remaining restricted to making recommendations to Parliament.

Chair of the Commons digital, culture, media and sport committee, Julian Knight told the FT that failure to announce new legislation would represent "a hammer blow" to the capability of the UK to regulate the technology sector.

If the report is accurate, it would mean that the UK is moving in the opposite direction to the EU, which in recent weeks agreed new rules to limit the market power of big online platforms by passing the Digital Market Act and Digital Services Act.

The DMA, which comes into force later this year, aims to make it easier for small and mid-sized tech to enter markets currently dominated by the tech giants by tackling anticompetitive practices. Meanwhile, the DSA, which still needs to pass through the European Parliament and Council, will regulate online advertising and content hosted by the online providers and social media firms. Both are backed up by significant fines.