UK creates Big Tech watchdog to check firms like Facebook and Google

A photo taken on October 21, 2020 shows the logo of the multinational American Internet technology and services company, from left : Google, the American online social media and social networking service, Facebook, Twitter, Instragram, Snapchat, and Tik Tok on a computer screen in Lille. (Photo by DENIS CHARLET / AFP) (Photo by DENIS CHARLET/AFP via Getty Images)

The UK is set to launch a new watchdog in April next year aimed at preventing tech giants such as Facebook (FB) and Google (GOOG) from abusing their market dominance.

Britain’s Competition and Markets Authority (CMA) said that in 2019, the two companies accounted for about 80% of the £14bn ($18.7bn) spent on advertising.

The new Digital Markets Unit, which will be set up within the CMA will seek to enforce a new code of conduct governing the behaviour of online platforms. It will co-ordinate with regulators including Ofcom and the Information Commissioner's Office (ICO).

The new body could be given powers to suspend, block and reverse decisions made by technology companies and to impose fines for failing to follow the rules.

Under the new code, users will have more control over their personal data. Firms will have to be more transparent about how they use consumers’ data and restrictions that make it harder to use rival platforms will be banned, the government said.

The regime also aims to support the news industry by rebalancing the relationship between publishers and platforms.

Facebook and Alphabet-owned Google have previously said they are committed to working with the UK government and regulator on digital advertising.

It comes after government concerns that global Big Tech firms are restricting industry growth and hampering innovation.

Business secretary Alok Sharma said: "Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives - whether it's helping us stay in touch with our loved ones, share creative content or access the latest news.

"But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers.

"Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren't pushed out."

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READ MORE: EU accuses Amazon of warping competition on its marketplace

Britain and Europe have long been pushing for a global digital tax on tech firms — which has recently been shelved after US president Donald Trump threatened retaliatory tariffs on products from British car exports to French cheese.

Last week, EU industry chief Thierry Breton told the German weekly Welt am Sonntag that services provided by technology companies could be banned from the European Market if they breach EU regulations. The bloc is set to release details next month of a shake-up of digital rules aimed at curbing competition being stifled.

Earlier this month, the EU’s top competition watchdog concluded that Amazon (AMZN) is unfairly warping the online retail market by collecting private data on independent sellers that use its platform and then using the data against them.

The EC said in a statement it had informed Amazon of its “preliminary view” that the online giant was “distorting competition” through the use of data on its Marketplace platform.

If the preliminary findings are confirmed by a full investigation, Amazon would be in breach of EU competition law. The findings relate to Amazon's business practices in France and Germany. In August, Germany’s federal cartel office opened a similar investigation of its own.

The EC has also opened a second probe into Amazon on last week, investigating whether it unfairly gives preferential treatment to sellers that use its logistics and delivery services.

EU worries that Amazon may be influenced by these factors when awarding the “Buy Box,” a preferential listing status that appears at the top of searches. The watchdog is concerned that sellers who don’t use Amazon’s logistics and delivery services are also being unfairly shut out of Amazon Prime.

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