New Watchdog To Boost Online Competition Launched

The Digital Markets Unit to help make sure tech giants such as Facebook and Google cannot exploit their market dominance to crowd out competition and stifle innovation online has been launched.

The Government said the new unit had launched in “shadow” non-statutory form ahead of legislation granting its full powers.

The News Media Association welcomed the launch of the DMU, which will sit within the Competition and Markets Authority and be led by Will Hayter, but called for the legislation to be brought forward as a matter of urgency to save hard pressed local papers from going out of business.

“The news media industry welcomes the launch of the DMU but it is vital that it is equipped with the tools it needs to level the playing field between publishers and the platforms,” the NMA said.

“This means bringing forward the legislation as soon as possible otherwise trusted news sources – which have done so much to support communities during the coronavirus pandemic – face a grim outlook.”   

Announcing the launch of the DMU, the Government said that around £14 billion was spent on digital advertising in the UK in 2019, around 80 per cent of which was spent on Google and Facebook, and the CMA notes the number of adverts that consumers are exposed to on digital platforms is increasing.

By contrast, according to AA/Warc, news brands took just £579 million in digital ad spend in 2019. 

Facebook’s average revenue per user has increased from under £5 in 2011 to more than £50 in 2019 and its average revenue per user is now more than ten times higher than competitors.

The Government said it will consult on the design of the new pro-competition regime this year and legislate to put the DMU on a statutory footing “as soon as Parliamentary time allows.”

Culture Secretary Oliver Dowden has asked the DMU to work with Ofcom to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers.

This would pave the way for the future “rules of the road” and is alongside the wider work being done by the Government, following the Cairncross Review and the package of support through the pandemic, to boost the sustainability of the press, the Government said.

Mr Dowden told MailOnline that the need for legislation could include for example suspending, blocking or reversing tech giants’ decisions, or ordering them to act to comply and imposing financial penalties. It could look at matters such as the price paid by online platforms for news content, he added.

The NMA has said that a news media bargaining code which draws upon and improves the Australian template would help restore the balance between platforms and publishers.  

Announcing the launch of the DMU, Mr Dowden said: “Today is a major milestone in the path to creating the world’s most competitive online markets, with consumers, entrepreneurs and content publishers at their heart.

“The Digital Markets Unit has launched and I’ve asked it to begin by looking at the relationships between platforms and content providers, and platforms and digital advertisers.

“This will pave the way for the development of new digital services and lower prices, give consumers more choice and control over their data, and support our news industry, which is vital to freedom of expression and our democratic values.”

CMA chief executive Andrea Coscelli said: “People shopping on the internet and sharing information online should be able to enjoy the choice, secure data and fair prices that come with a dynamic and competitive industry.

“Today is another step towards creating a level playing field in digital markets. The DMU will be a world-leading hub of expertise in this area and when given the powers it needs, I am confident it will play a key role in helping innovation thrive and securing better outcomes for customers.”

The Government has also published an outline of the new unit’s function and role for its first year of operation. It includes working alongside business, the Government and academia to compile the necessary evidence, knowledge and expertise so that once the new pro-competition regulatory regime is in place it can begin operation as quickly as possible.

The NMA will engage with the new regulator to ensure the needs of news media publishers are considered during this process. 

The work will inform future legislation in this area and follows the CMA’s market study into online platforms and digital advertising which was widely welcomed and highlighted the consumer harm caused by the dominance of the platforms.