The UK’s Competition and Markets Authority (CMA) has launched its framework for implementing a new digital markets competition regime aimed at promoting fair competition, innovation, and growth across the country’s tech sector. Effective from 1 January 2025, the framework is directly derived from the Digital Markets, Competition and Consumers Act, which received Royal Assent in May 2024.
The British competition watchdog’s regime is centred on the designation of firms with “Strategic Market Status” (SMS) for specific digital activities. This status applies to companies holding substantial market power, giving the regulator authority to impose conduct requirements or introduce measures to promote competition. These interventions aim to curb anti-competitive behaviours that could harm smaller businesses and consumers.
Firms with SMS status may face restrictions designed to prevent practices like favouring their own services or using exclusive access to customer data to maintain dominance. The new rules also focus on enabling easier switching between digital service providers and ensuring businesses can access the tools and data needed to innovate and compete effectively.
Implementation timeline and investigations
The CMA has outlined a phased approach to implementing the regime. Investigations into SMS designation will begin in January 2025, targeting two digital activities. A third investigation is expected towards mid-2025, allowing the authority to manage resources while minimising stakeholder disruptions. Each investigation must be completed within a statutory nine-month period, and consultations on conduct requirements will run alongside these investigations to expedite outcomes. The authority plans to engage closely with businesses and stakeholders to ensure a smooth rollout of the regulations.
“The new digital markets competition regime provides a unique opportunity to harness the benefits of investment and innovation from the largest digital firms whilst ensuring a level playing field for the many start-ups and scale-ups across the UK tech sector,” said the CMA’s chief executive, Sarah Cardell. “It will ensure that the multitude of UK businesses and consumers who depend on these large firms for critical products and services benefit from more innovation, more choice and more competitive prices.”
The introduction of the digital markets competition regime follows a series of findings that spotlight the CMA’s concerns about the practices of dominant tech companies. A recent study commissioned by the regulator criticised Apple and Google for policies that limit competition in the UK’s mobile ecosystems. Specifically, Apple’s restrictions on browser innovation and a revenue-sharing arrangement between the two companies were highlighted as barriers to fair competition.
Additionally, in September 2024, the CMA provisionally found that Google had engaged in anti-competitive practices in the open-display advertising sector. The regulator alleged that Google leveraged its dominance to prioritise its own services, disadvantaging competitors and impacting thousands of UK publishers and advertisers reliant on its advertising tools.
To prepare for the regime, the CMA established the Digital Markets Unit (DMU), which has been operating in shadow form since 2021. The CMA also appointed nine technology specialists in 2023 to bolster its capacity to address complex challenges in the sector.
Read more: Is the CMA capable of regulating big tech’s AI ambitions?
