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UK regulator will have the power to impose steep fines on Big Tech

The unit will also make it easier to switch between digital platforms.

An illustration picture taken in London on December 18, 2020 shows the logos of Google, Apple, Facebook, Amazon and Microsoft displayed on a mobile phone. - Accelerating the transition to an ever more digital life, the coronavirus pandemic has tightened tech giants' grip on billions of customers' lives. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
JUSTIN TALLIS/AFP via Getty Images
Jon Fingas
Jon Fingas|@jonfingas|May 6, 2022 9:50 AM

The UK's recently established Big Tech regulator will have extensive authority to punish giant companies it deems anti-competitive. As TechCrunch notes, the country's Department for Digital, Culture, Media & Sport (DCMS) has revealed that the Digital Markets Unit will have the power to levy fines of up to 10 percent of a company's worldwide annual turnover if it doesn't honor codes of conduct, plus up to five percent of daily turnover for each day the violations continue. Firms will also have to make it easier to switch between platforms (such as mobile devices and social networks), break away from default apps (including search) and take more control of data sharing.

Big Tech will also have to report acquisitions to the Competition and Markets Authority before they close to determine if any "further investigation" is necessary. The DMU could block acquisitions meant to stifle competition, reducing the chances that the unit has to regulate when damage has already been done. The CMA might not have ordered Meta to undo its acquisition of Giphy, as an example.

The moves may require tech heavyweights to notify smaller companies when they change algorithms that could hurt their business, the DCMS said. Google might have to warn stores if changes will affect search rankings, for example, while Meta could alert media outlets if they'll be less prominent in Facebook's feed. App creators, meanwhile, could also expect "fairer and more transparent terms" for offering their wares.

The UK also intends to borrow cues from Australia and Canada by ensuring that news publishers are "paid fairly" for online content. The DMU could intervene to address pricing disputes, for instance. While the CMA clarified that it will consult with everyone involved before implementing a conduct code, it already saw a need to address an "imbalance of bargaining power" that let online platforms strong-arm publishers.

The effectiveness of the DMU will depend on the exact codes put in place, and it doesn't yet have the authority DCMS promised. It's not yet clear when that will happen. If the new promises hold up, though, they could mandate sweeping changes at large tech companies. Apple and Google might have to loosen restrictions on apps and operating system defaults, while the likes of Amazon and Meta may have to increase transparency and be cautious when changing recommendation algorithms. While fines taking a cut of global turnover are nothing new, the DMU's maximum penalties are particularly steep and could leave Big Tech with little choice but to fall in line.

UK regulator will have the power to impose steep fines on Big Tech