Big Tech lobbyists are stuck in the UK’s landmark competition bill – POLITICO

LONDON — As the UK prepares to overhaul its competition regime, a fierce lobbying battle has erupted between the world’s biggest tech companies and their challengers.

Ministers are preparing to publish new competition legislation at the end of April, giving regulators more power to prevent a handful of companies from dominating digital markets.

But concern over the influence of US tech giants in Westminster has prompted ministers close to the bill to warn that the new legislation could be watered down.

Two ministers have expressed concern that Big Tech companies are seeking to weaken the appeals process for decisions made by the country’s beefed-up competition regulator, according to multiple people who were present at those talks or whose organizations there. were represented. They requested anonymity to discuss private meetings.

One MP said a minister had also approached them to raise concerns, while at an industry roundtable two ministers raised concerns about Big Tech companies trying to influence the appeal mechanism.

An industry representative said, “There’s been a lot of lobbying from Big Tech, but I don’t know if they’ll be successful.”

Call who?

The Digital Markets, Competition and Consumer Affairs Bill will give new powers to a branch of the Competition and Markets Authority called the Digital Markets Unit (DMU). Under this plan, the DMU will be able to fine a company 10% of its annual turnover for violating a code of conduct.

The code, which has not yet been published, would be designed to ensure that a company with “strategic market status” cannot “unfairly use its market power and strategic position to distort or undermine competition between users of the company’s services”. the government said.

Jonathan Jones, senior public law consultant at Linklaters and former head of the UK government’s legal department, writing that the plan would have “very significant consequences” for Big Tech companies and could force them to “significantly change” their business models.

One of Big Tech’s concerns is that the bill will only allow companies to appeal decisions made by the DMU on whether or not the correct process was followed, known as the standard of judicial review. rather than the content or merit of the decision. This puts it in line with other regulators and should mean the process is faster, but it also makes it harder to appeal decisions.

Big Tech companies want to be able to appeal on the “deserved”, arguing that it is unfair that they cannot challenge whether a DMU decision was correct or not. They also argue that it will not necessarily be slower than the standard of judicial review.

Technology Minister Paul Scully, who is responsible for the bill, told POLITICO: “We want to make sure the legislation is flexible, proportionate and fair for big business and challengers. Any corrective action must be put in place quickly because digital markets are changing rapidly. »

A representative from a mid-sized tech company said, “This is the fundamental point of contention and it will determine whether the bill works for SMBs and challengers against Big Tech.

“The fear is that big companies with big lawyers will figure out how to handle themselves (during the appeals process) so that they maintain their edge in the market for years. We also heard from ministers expressing these concerns.

Consumer group Which? also urges the government to maintain its proposed appeal system. “For the DMU to work effectively, the government needs to stick to its guns and ensure that the decisions it makes are not tied to a lengthy appeals process,” said policy director Rocio. Concha.

“Investigator and Executioner”

But Jones argued the bill would make the DMU too powerful.

“The DMU will have the power to decide who it will regulate, set the rules that apply to them, and then enforce those rules,” he wrote. “That makes the DMU a legislator, investigator and executioner.”

On the appeal method, Jones argued that it is “simplistic” to think that the government’s proposed appeal standard would be faster than a merit-based standard.

Ben Greenstone, managing director of technology policy consultancy Taso Advisory, said: “I can understand the argument from both sides. The biggest tech companies have an incentive to oppose this, but I suspect the government will keep the appeals process as it is, as it keeps it in line with the broader competition regime.

However, he added that the bill would work better if some kind of compromise could be found with the biggest tech companies.

The International Playbook

One of the biggest fears of midsize companies is that the biggest tech companies will use strategies already proven overseas to lengthen the appeal process or even delay the entire bill.

In the United States, the Open Application Markets Act failed to pass following huge lobbying expenditure.

Rick VanMeter, executive director of the Coalition for App Fairness, which is based in the US but has UK members, said: “In the US, we have learned that these guardians of mobile apps will stop at nothing to preserve the status quo and squash their contest.

“To succeed, policymakers everywhere must see through the efforts of these gatekeepers for what they are: selfish attempts to retain market power.”

Google and Microsoft declined to comment. Apple did not respond.