UK set to shelve plans to empower new technology regulator

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The UK’s Digital Markets Unit will not be able to establish rules for leading internet companies like Meta and Google, nor impose fines on them for breaking rules.

The government's new legislative programme is not expected to include a bill to provide statutory underpinning to the Digital Markets Unit that is based within the Competition and Markets Authority (CMA), the Financial Times has reported.

The decision is a serious blow to global efforts to curb the dominance of internet companies, including Google and Meta, and poses a sharp contrast with the policy of the European Union, which is moving towards enforcing stricter controls on technology giants to prevent them from using their dominance to push out smaller firms and disadvantage consumers.

The government announced its plans to set up the Digital Markets Unit (DMU) in 2020, a year after the CMA began a probe into the influence of US technology platforms and how they collected and used personal data and consumers' interests.

The DMU was expected to be given powers to devise codes of conduct for tech companies and impose fines of up to 10 per cent of annual turnover. It was established in ‘shadow form’ last year and is currently operating with around 60 staff. However, it currently has no powers beyond the CMA’s existing capabilities.

In 2019, Google and Meta accounted for nearly 80 per cent of the UK's digital advertising spending of about £14bn, helped by their large user databases and deep pockets, the CMA said.

The government’s decision comes after it dropped a bill from the Queen's Speech on long-delayed reform to audit and corporate governance, following several corporate scandals, causing Tory officials to say Boris Johnson is going cold on state intervention in the economy.

Julian Knight, Tory chair of the Commons Digital, Culture, Media and Sport committee, said if legislation to empower the tech regulator was not in the Queen’s Speech it would “damage the credibility of the whole enterprise”.

“It would be a hammer blow to the capability of the UK to regulate these sectors,” he added.

The original plans for the UK tech regulator had been welcomed by most sectors, including media companies which were set to benefit from new rules of engagement between news publishers and internet groups such as Google and Meta.

The Department for Digital, Culture, Media and Sport said the new UK regime affecting tech companies would “change the conduct of the most powerful tech firms and protect the businesses and consumers who rely on them right across the economy”.

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