A New British Law Charts a Course Towards Reining in Big Tech

Late last month, the United Kingdom put a new law on the books that could make a real difference in the fight to rein in Big Tech. Passed in the nick of time before an election, the UK’s new Digital Markets, Competition and Consumers Act (DMCCA) is the answer to the EU’s Digital Markets Act (DMA). Its passage caps a long process since the Furman Review in 2019, a report on the state of competition in digital markets which first recommended that Britain overhaul its competition regime for the digital age.

The DMCCA empowers the UK’s Competition and Markets Authority (CMA) to police firms it designates as having “Strategic Market Status” (SMS). It allows the regulator to prohibit anti-competitive practices (through “conduct requirements”) or force platforms to open up their walled gardens (through “pro-competitive interventions” or PCIs).

Aggressive lobbying by Big Tech firms threatened the regime, but it didn’t manage to kill the Bill. They did succeed in watering it down, however, including boosting their ability to appeal fines and throwing a few extra hurdles in the way of the CMA’s new enforcement powers. Most worrisome is an open-ended “countervailing benefits exemption” that will allow SMS firms to come up with various excuses for their monopolistic conduct.

Nonetheless, progress is progress: the DMCCA is a step forward that boosts the CMA’s powers to address the many harms inflicted by tech monopolies.

The road to enforcement

Enforcement is the test of any new law, so all eyes will now be on the CMA. The CMA says it aims to move swiftly and will kick off several investigations into designating the tech giants later this year, and draft the first conduct requirements for major platforms.

It helps that the CMA isn’t starting from a clean slate – it has had several years to establish and scale the new Digital Markets Unit (DMU) that will lead on enforcement. The DMU is set to have around 200 employees by the time enforcement starts later this year, whereas the European Commission has so far assigned only about 80 people to DMA enforcement. The CMA also employs over 80 specialists (including data scientists, behavioral scientists and machine learning experts) in a standalone Data, Technology and Analytics (DaTA) unit.

This blend of more staff power and technical expertise will help the CMA lift up the hood of Big Tech’s black-box algorithms and murky business models, while counterbalancing the millions these firms throw at lobbyists, lawyers, and consultants. It’s not yet a fair fight, but it’s more than most regulators are currently able to muster.

The CMA can – and should – learn from the EU’s experience with the DMA. There, Big Tech’s playbook has been to dig in and drag its heels. Tech giants are ‘complying’ as minimally – some say maliciously – as they can with the legislation to ward off any threat to their business models. The platforms are also already firing off legal challenges and riding out investigations for non-compliance. The CMA should prepare for similar tactics in the UK and intervene proactively, instead of hoping for good-faith compliance.

The CMA’s new powers also give it more room for maneuver than the EU’s DMA. They have more discretion to designate firms and design regulatory obligations on a case-by-case basis, tailoring interventions to each firm’s business model while reducing the risk that technological changes overtake them. This is critical – we are already seeing how the European Commission has struggled to meet the moment with generative AI. Meanwhile, the CMA has already signaled plans to flex its new powers to keep the AI sector open and competitive – although we’ve seen no firm action yet.

It won’t all be plain sailing. Compared to the EU’s 450 million inhabitants, the UK’s market of 68 million is small fry. It’s also desperate for investment after the Brexit debacle. All this would make any saber-rattling by Big Tech to pull out of Britain more effective than it would be in the EU. We saw this during the Microsoft/Activision saga, when the CMA walked back its veto of the deal in the teeth of intense pressure from the companies and the UK government. Enforcement will get tricky, and it will take political will.

New government, new approach?

This makes the upcoming UK election critical. The opposition Labour Party, widely tipped to take over from the incumbent Conservatives, has said very little about its approach to the tech monopolies or on competition. And while it’s too soon to tell, there are worrying signs that Labour may defer to Big Tech more than one might expect from a government of the left. Under Keir Starmer, Labour has softened its approach to Big Tech, including by abandoning plans for a digital services tax, and appears increasingly eager to cosy up to big business.

The risk is that an incoming Labour government gets its ear bent by Big Tech and pressures the CMA to back down just as the starting gun is fired on the DMCCA. While the CMA’s formal independence formally shields it from political interference, ministers have a hand in enforcement—for better and worse.

Ministers can amend the criteria for SMS designation, change the conduct requirements SMS firms must comply with, and reject guidance issued by the CMA. These provisions, ostensibly intended to keep the law up to date, could either sharpen the CMA’s tools—or blunt them.

It’s too soon to tell how all this plays out. Labour may well back the CMA and the new law – not least because taking back control from the tech giants could inject some life into the flagging UK economy. Labour has also expressed its admiration for “Bidenomics,” in which aggressive antitrust enforcement plays an essential role. But one thing is clear: the CMA needs all the help it can get. The DMCCA is a bold start, but the real battle for a fair and open digital economy is only just beginning.