Watch Out Tech: CMA warns of continued investigations into big tech

March 10, 2021

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2 min read

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What's going on here?

Tech giants such as Facebook, Google, and Amazon are to face increased scrutiny from the Competition and Markets Authority (CMA). 

What does this mean?

The CMA plans to launch a series of antitrust investigations into big tech companies this year, signalling a tougher approach to the sector in the wake of Brexit. 

The CMA would like to see the market evolve and become more competitive, that is with more players with greater diversity. The CMA is said to be actively scanning the players, complaints, and cases both in the UK and elsewhere. With over 80% share in the UK’s advertising market, the CMA reportedly considers Facebook and Google to have too large a share of the space. The Authority would like to see regulatory changes to deal with such market dominance in order to prevent distortions for competitors, consumers, and potentially even political processes. 

What's the big picture effect?

The increased scrutiny comes as the CMA looks to assert its independence after Brexit. However, as big tech companies have been facing increased scrutiny from regulatory bodies all over the world, this is only the latest sign of increased surveillance of their practices. The EU has been investigating the practices of Apple and Amazon, while Google is being sued in the US for allegedly acting unlawfully in order to maintain its dominant position in searches and advertising. 

It seems that Big Tech should get used to the increased scrutiny as the CMA is due to be granted additional powers later in the year with the creation of a new sector-specific unit – the Digital Markets Unit (DMU). This sector will enforce fair trading, trust and transparency in tech companies that are considered to have “strategic market status”. Companies with the strategic market status, that is, those with over £1bn in UK revenue or £25bn globally, will be legally bound by a code of conduct overseen by the DMU. This code could include, for example, rules on how these companies’ can trade with publishers fairly, and not take advantage of their power and position. For those in breach, the DMU will have the power to impose fines of up to 10% of turnover, which, given the size of some of these companies, could be billions of pounds. 

With scrutiny over market dominance growing, we can expect that acquisitions made by big tech companies will come under closer inspection than they were previously. This means that the tech giants will need to carefully consider how the CMA (as well as other international regulatory bodies) will view any proposed acquisitions and means by which any anti-competitive behaviours can be mitigated. As a result, we can expect increased business for competition lawyers and greater collaboration between M&A and competition departments as they identify risks and strategies throughout the transaction process.

It looks as if scrutiny and regulation of big tech will continue to increase, but with such strongholds over the market already, whether this will be enough to open the online market up to smaller players is yet to be seen. 

Report written by Julie Lawford

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