New internet watchdog will get the teeth to challenge tech giants

‘The most important driver of global success is not tax subsidies but competition’

A NEW online regulator will be given statutory powers to hit Google, Facebook and other technology giants with multibillion-pound fines if they abuse their dominant positions.

The Digital Markets Unit will police the largest tech companies through a code of conduct that they will be legally required to sign up to.

Those that flout the rules face fines worth up to 10pc of their global annual turnover.

Last year Alphabet, Google’s parent, reported annual sales of $258bn (£218bn), while Facebook owner Meta reported sales of $118bn.

The new watchdog, part of the Competition and Markets Authority (CMA), is being set up to address fears that the largest tech companies have become too powerful and are crushing smaller rivals, reducing consumer choice.

Jeremy Hunt yesterday confirmed legislation to establish the Digital Markets Unit will be brought forward as soon as parliamentary time allows.

The Chancellor said that “the most important driver of global success is not tax subsidies but competition”, adding: “So we will legislate to give the Digital Markets Unit new powers to challenge monopolies and increase the competitive pressure to innovate.”

Companies including Facebook and Google, which together control 80pc of Britain’s £14bn digital advertising market, have previously been described as “unassailable” by the CMA.

In official reviews, the regulator said the tech giants were so powerful that they had effectively become “gatekeepers”, controlling how customers interacted with many other businesses.

For example, Google also controls 90pc of the internet search market, while one third of all British e-commerce transactions were taking place through Amazon’s online marketplace.

The CMA said the vast troves of data collected by the companies has also created a “feedback loop”, as it helps them to attract yet more customers and then even more data.

But under the proposed reforms, companies with such outsized influence over the digital economy would be given “strategic market status” and made to follow codes of conduct designed to level the playing field.

Alongside Google, Facebook and Amazon, others that could be targeted include Microsoft, Amazon, Apple and ebay. The code would block them from unreasonably restricting consumer choice, for example by making it difficult to import data from one service to another or requiring exclusivity from businesses.

They would also have to notify the CMA about any acquisitions they plan on making.

Rocio Concha, director of policy at Which?, said the new regime “should ensure the UK has consumer protections and competition policy fit for the digital age”.

She said: “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.”

The Chancellor’s announcement comes after MPS on the business select committee called for the Digital Markets Unit to be legally empowered and “given teeth” as soon as possible.

It was first proposed in 2019 after an official review by Jason Furman, the US economist who was Barack Obama’s top economic adviser. He warned that current competition regulations were not fit for the digital age.

The Commons business select committee last month urged ministers to tackle “predatory practices by big tech firms without delay”.