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Britain proposes tailored competition rules for Google and Facebook

LONDON (Reuters) - Britain’s competition watchdog said tailored rules should be used to regulate tech giants Google, Facebook and others on Tuesday, giving it new powers to harness the potential of digital markets and drive innovation.

FILE PHOTO: The Google name is displayed outside the company's office in London, Britain November 1, 2018. REUTERS/Toby Melville/File Photo

The Competition and Markets Authority (CMA) said a legally binding code of conduct backed up by penalties that could extend to fines of up to 10% of turnover, as well as enhanced merger rules, should be set up in legislation.

The code will be enforced by a new Digital Markets Unit announced last month.

CMA Chief Executive Andrea Coscelli said consumers and businesses who relied on Google and Facebook should be treated fairly, with a level playing field for competitors.

“For that to happen, the UK needs new powers and a new approach,” he said on Tuesday.

“In short, we need a modern regulatory regime that can enable innovation to thrive, while taking swift action to prevent problems.”

The CMA’s proposals are based on principles rather than rules or outcomes, tailored to different technologies.

“On balance this is the best way of doing it,” Coscelli said in an interview.

“It’s future proof, these are sectors and industries where things change quite quickly because of the changes in technology and we want to set up a regime that lasts well into the 2020s and beyond.”

The new unit will be set up in April, but legislation might not be place until 2022.

It will be part a wider regulatory framework that will include new rules for harmful online content and data protection, the CMA said.

Governments around the world are looking at strengthening the regulation of tech firms that have become even more powerful during the COVID-19 pandemic.

Coscelli said there was “quite a lot of parallel travel” with other jurisdictions, but he needed to convince the British government to act.

The proposed rules focus on companies’ dominance in individual sectors, such as Google and Facebook in digital advertising. The two companies accounted for around 80% of 14 billion pounds ($18.7 billion) spent in 2019, the CMA has said.

Coscelli said other potential targets included Apple’s app store.

The unit will comprise lawyers, data scientists and other experts, he said.

“What we are trying to do here is reduce the distance between the companies and the regulator,” he said, adding that although the regulator would seek to work with companies on compliance, it needed the “teeth” to impose substantial penalties.

Editing by Michael Holden, Sarah Young and Bernadette Baum

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