In his Autumn Statement Chancellor Jeremy Hunt declared his intention to bolster the Digital Markets Unit, crack down on monopolistic practices and “increase the competitive pressure to innovate”. The move has been welcomed by small business and consumer advocates with the caveat that “more information is needed”.
Increased powers for the Digital Markets Unit form part of his efforts to increase growth through innovation and competition and are set against deep spending cuts and tax rises designed to restore market confidence that was left on shaky ground by the mini-Budget introduced by Kwasi Kwarteng and Liz Truss.
The Digital Markets Unit was established as part of the Competition and Markets Authority in 2021 to “operationalise the future pro-competition regime for digital markets” which included regulatory oversight of the practices of some of the largest technology companies in the world including Apple, Google, Microsoft and Amazon.
When launched it was responsible for safeguarding choice, control over data, promoting competition online and tackling unfair business practices, but was launched as an advisory unit that worked in co-operation with other regulators.
Powers to tackle Big Tech
The new announcement will include legislation that will give the regulator teeth, with powers to tackle these large technology companies directly. It isn’t clear what form this will take, whether it is fines or ordering changes to practices or when the legislation will be introduced but it is an important step, says Rocio Concha, Which? Director of Policy and Advocacy.
“A Digital Markets Unit with effective powers to tackle the dominance of a handful of tech giants and promote competition in digital markets is good news for consumers, who should benefit from more choice and lower prices, and also for helping smaller businesses to compete,” Concha said. “These changes should also give the Competition and Markets Authority the powers to clamp down on consumer rip-offs, fake reviews, and other harmful practices by directly fining firms that break the rules.”
Alan Vey, chairman and founder of blockchain company Aventus said the political realm is finally noticing the value in the digital domain, suggesting that the new regulatory regime will help stimulate market growth. “The industry has long been waiting for an increased focus on challenging monopolies and altering the competition framework to incentivise competitive pressure to innovate,” he said.
“Proper regulation that protects consumers in what is a complex and fast-paced investment environment is also essential, and hopefully this new proposed bill will begin laying the legislative foundations required for tackling fraud and scams found in the markets.”
The move comes on the same day Google settled a privacy lawsuit brought by 30 US states for $391.5m, bringing the total fines issued against Big Tech companies this year to over $3bn.
As well as tackling Big Tech and monopolies, Hunt wants to use regulations, investment and education to help the next generation of tech companies in the UK. He said: “I want to combine our technology and science brilliance with our formidable financial services to turn Britain into the world’s next Silicon Valley.”
This will include a continuation of efforts to remove as many regulations as possible started under Boris Johnson. “By the end of next year, we will decide and announce changes to EU regulations in our five growth industries: digital technology, life sciences, green industries, financial services and advanced manufacturing,” Hunt declared.
Reduced regulation elsewhere
There will also be a boost in the R&D budget, with £20bn of public funding committed by 2024 and other measures designed to help scale-up companies emerging from research institutions. “Transforming British intellectual genius into British commercial success,” he said.
Russ Shaw CBE, Founder of Tech London Advocates & Global Tech Advocates welcomed the news of R&D budget rises and new investment zones with clusters around universities to help projects emerging from those institutions raise capital but said there wasn’t enough detail on specific plans.
“AI, quantum and robotics will define the economies of this century, and so it was a shame the Chancellor was vague around his plans for the [Enterprise Investment] and [Seed Enterprise Investment] schemes which will help the next generation of entrepreneurs establish the companies of tomorrow in these verticals,” said Shaw.
“Having said that, additional funding for schools and the implementation of the Skills Reform Programme were promising and necessary steps in strengthening the pipeline of talent to power these growth sectors – particularly given the UK tech sector now has the second most vacancies behind healthcare.”
The funding will see schools get an extra £2.3bn per year for the next two years. Hunt says he wants to see “school standards continue to rise for every single child” as well as investment in filling the skills gap for tech jobs.
“In recent years, the tech industry has heard plenty of rhetoric from political leaders around commitments to championing Britain as a global science and technology superpower. Today’s Autumn Statement set out the right framework and mindset – it’s important the Government now follows through on that commitment,” said Shaw.