Tech giants do not face enough competition, review says

The biggest technology companies have become too dominant and government should create a new competition unit to help increase consumer choice, an independent review into the sector has said.

Commissioned by Chancellor Philip Hammond, the review recommends that the unit is created and backed up with legal powers as a means of helping users maintain more control over their data online and more easily switch between platforms and services.

It also calls for the creation of a code of conduct and the strengthening of regulatory powers to tackle anti-competitive behaviour.

Harvard professor Jason Furman, who led the review, said: “The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation.

“Some say this is inevitable or even desirable.

“I think the UK can do better.

Philip Hammond
Chancellor Philip Hammond (Dominic Lipinski/PA)

“The Chancellor, Philip Hammond, was right to recognise there is a better way than just continuing with the status quo.

“My panel is outlining a balanced proposal to give people more control over their data, give small businesses more of a chance to enter and thrive, and create more predictability for the large digital companies.

“These recommendations will deliver an economic boost driven by UK tech start-ups and innovation that will give consumers greater choice and protection.”

The review also recommends changes to merger rules so that the Competition and Markets Authority (CMA) is better equipped to stop mergers that are considered likely to damage future competition or consumer choice.

In addition, it calls for the introduction of powers that would force large companies to open up to smaller firms by providing access to certain data, where doing so would not affect user privacy.

It said if the proposals were adopted it could help boost the economy by encouraging the development of new platforms alongside established names.

In response, Mr Hammond said: “The UK leads the world in embracing technology and the opportunities it delivers for people.

“Competition is fundamental to ensuring the market works in the interest of consumers, but we know some tech giants are still accumulating too much power, preventing smaller businesses from entering the market.

“The work of Jason Furman and the expert panel is invaluable in ensuring we’re at the forefront of delivering a competitive digital marketplace.

“I will carefully examine the proposals put forward by the panel before responding later this year, setting out how the Government will implement the changes needed to ensure our digital markets are competitive and consumers get the level of choice they deserve.”

Damian Collins MP, chairman of the House of Commons Digital, Culture, Media and Sport (DCMS) select committee also backed calls for tighter regulation.

“I welcome the publication of Professor Furman and his expert panel’s report on unlocking digital competition.

“Its central conclusions that digital markets only work well if they are supported with strong pro-competition policies, corroborates a number of the findings of my committee’s report into disinformation and ‘fake news’ published in February,” he said.

“It is clear that a strong code of ethics is needed to regulate online platforms, and I agree with the report’s conclusion that the proposed code of competitive conduct is complementary with the code of ethics suggested by my committee.

“We welcome the measures put forward to tackle anti-competitive practices and bullying tactics by market leaders.

“This comes at a critical moment ahead of the beginnings of regulation from Government to rein in the powers of the tech companies.

“I agree with the report that common data standards, including around the treatment of inferred data, should be set.

“My committee was concerned by the treatment of inferred data by large tech companies such as Facebook, and it is essential that the Government acts to protect consumers.

“The report is right to highlight that United Kingdom has the opportunity to lead by example in the area of digital regulation.

“With a history of fair and robust regulation, and with the largest tech sector in Europe, the UK is uniquely placed to set world-leading standards in the digital arena.

“Through the formation of the International Grand Committee it has already been demonstrated that other nations are ready to work with us to tackle the plethora of challenges presented by social media platforms.”

Later this month, a government white paper on online harms is expected to be published, which is likely to include some proposals for new regulation on social media platforms and internet companies.

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