The legislation gives the Competition and Markets Authority new powers to impose requirements on tech companies with “strategic market status”, it recalls. “Gatekeeper” organizations. Which should be followed. The EU’s Digital Markets Act.
However, while these laws are similar, the new legislation is less one-size-fits-all: under the DMCCA, the CMA can apply pre-determined regulations, known asPerform the requirements.SMS companies to solve their specific problems.
Problems can be related to:
DMCCA was formed in response to A report Published in 2019 by the Digital Competition Expert Panel, chaired by Jason Furman, Professor of Economic Policy at Harvard University and former Chief Economist for US President Barack Obama. It included recommendations to open up digital markets in the UK.
While the DMCCA was greenlit in 2020, due to various delays, it was only passed by Parliament in April 2023 and given Royal Assent in May 2024. It is expected to come into effect in January 2025.
See: The UK government says Google is abusing its dominant position in the ad-tech sector.
What is the purpose of the act?
The DMCCA aims to enable interventions by improving competitive conditions in digital markets that encourage investment, innovation and growth across UK tech companies, ultimately giving consumers access to the best possible technology for them. are
The CMA said in a statement Press release That the legislation would enable it to “more holistically” investigate the potentially competitive practices of Google, Apple, and other big tech firms. Rules will “build on and leverage its experience in areas it has already studied, such as the mobile ecosystem, which includes app stores.”
In one January 2024 InterviewSarah Cardell, CEO of the CMA, said: “The new regime is specifically designed to keep pace with developments in the fast-moving digital markets, which will complement our existing competitiveness and consumer protections. Complements the options.
“The DMCC Bill will establish a very targeted approach to deal with the substantial and strong market power of a small number of firms. It will ensure that challenger firms are truly disruptive. And can lead to exciting new innovations that will create great new products for consumers.
Who will the Act affect?
After a formal investigation, the CMA will designate a “very small number” of firms as having SMS and therefore subject to the DMCCA. These firms must have:
- A “substantial and strong market power in digital activity linked to the UK.”
- A “location of strategic importance.”
- A global turnover of over £25 billion or a UK turnover of over £1 billion.
SMS posts will be reviewed at least every five years. According to Cardel, between three and four will be launched in the first year of the new regime.
In August, The CMA rejected Google’s proposed policy changes. about in-app purchases listed on its Play Store, which prompted the investigation. He suggested that the company would be one of the first to receive the SMS because, if the CMA accepts the changes, it will limit what actions it can take under the DMCCA.
What will this act enable the UK government to do?
The DMCCA gives new enforcement powers to a new group set up within the CMA called the Digital Markets Unit. It counts current CMA directors and a former Ofcom executive as members.
The DMU will develop a unique set of “conduct requirements” for each company that has an SMS. They must abide by these behaviors even before they exhibit anti-competitive behavior to prevent them from occurring. This approach differs from other competition laws, where remedies are provided after an investigation reveals a violation.
See: Regulator CMA to scrutinize Microsoft and other cloud service providers in the UK
As well as conduct requirements, the DMU can undertake “pro-competitive interventions” which will proactively address adverse effects on a company’s competitiveness that arise from its disproportionate market power.
Examples of how DMU can support healthy competition in digital markets include:
- Avoid bundling or tying of products or services.
- Prevent self-preference of products or services.
- Mandating a competitor’s access to data or functionality.
- Products or services require mutual support.
- Requires “choice screens” that allow users to select their preferred default apps or services at the company’s discretion.
- There is a need for transparency regarding the algorithmic aspects of companies.
- Adequate trade terms are required.
Additionally, the DMU will require SMS companies to report any mergers and UK connections worth at least £25 million.
What are the penalties for non-compliance?
Under the DMCCA, the CMA is empowered to impose penalties for failures such as non-compliance with enforcement or final orders. Businesses and individuals may be required to submit testimonials or other documents to support the DMU’s work. Cardell said the CMA had legal obligations to maintain confidentiality about information and whistleblowers.
For fixed penalty amounts, businesses can face fines of up to £30,000 or 1% of their turnover. For fines calculated at the daily rate incurred by individuals, the maximum is £15,000 or 5% of the total turnover of non-compliance.
See: The Data (Use and Access) Bill: What is it and how does it affect UK businesses?
Cardel said the CMA “expects that in many cases we will be able to secure timely and beneficial changes without resorting to formal proceedings,” and instead engage directly with SMS firms. will resolve disputes.
What do critics say about the act?
Despite Mostly positive feedback In a government consultation at the end of 2024, the Act was not universally accepted. Critics are concerned that, instead of complying with the CMA, tech companies will simply exclude the UK from the rollout of new products.
Evidence of exclusion has already occurred in Europe. For example, Apple will not initially make its new suite of creative AI capabilities, Apple Intelligence, available on devices in the EU, citing “regulatory uncertainty posed by the Digital Markets Act”. happened Bloomberg.
See: Apple Intelligence EU: Possible Mac Releases Amid DMA Laws
Regulatory pushback may also have contributed to Google’s late arrival. Gemini Chatbots and meta Blocking your future AI products from Europe.
There are concerns that the CMA may exercise its powers in an arbitrary manner. Create custom rules for different companiesIt makes it more difficult for them to comply. But, Cardel said the Act is based on principles that fit under four themes. First, taking a targeted, evidence-based and proportionate approach.
Other topics are ensuring that the system complements CMA’s existing tools, engaging with various stakeholders, including Big Tech, and promoting competition to deliver better user outcomes. However, selection screens, interoperability, and sideloading actually can. Deteriorates user experience. through a phenomenon known as feature creep.
The Act can prevent any potentially anti-competitive merger where one party has a 33% market share in the UK and a turnover of around £350 million, and the target company is based in the UK. According to the law firm Link letters“In most cases it will be difficult to prove that an acquirer does not have some cut of the market or a 33% share on a supply arrangement that the CMA could use to establish jurisdiction.”
In November 2024, the CMA provisionally found competition concerns in the market for mobile browsers Born out of the duopoly of Apple and Google. It recommended mitigations that could be implemented once DMCCA came into force. However, Apple told TechRepublic that such mitigations would “harm user privacy and security and hinder our ability to create technology that differentiates Apple.”