Saturday, June 22, 2024

UK law will let regulators fine Big Tech without court approval

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The UK could subject big tech companies to hefty fines if they don’t comply with new rules meant to promote competition in digital markets. On Thursday, lawmakers passed the Digital Markets, Competition and Consumer Bill (DMCC) through Parliament, which will let regulators enforce rules without the help of the courts.

The DMCC also addresses consumer protection issues by banning fake reviews, forcing companies to be more transparent about their subscription contracts, regulating secondary ticket sales, and getting rid of hidden fees. It will also force certain companies to report mergers to the UK’s Competition and Markets Authority (CMA).

Only the companies the CMA designates as having Strategic Market Status (SMS) have to comply. These SMS companies are described as having “substantial and entrenched market power” and “a position of strategic significance” in the UK. They must have a global revenue of more than £25 billion or UK revenue of more than £1 billion.

The law will also give the CMA the authority to determine whether a company has broken a law, require compliance, and issue a fine — all without going through the court system. The CMA can fine companies up to 10 percent of the total value of a business’s global revenue for violating the new rules.

If all this sounds familiar, it’s because the European Union enacted a similar law, called the Digital Markets Act (DMA). The legislation issues sweeping requirements for companies deemed digital “gatekeepers,” such as Apple, Google, Meta, and Amazon. However, unlike the DMA, the DMCC offers a more tailored approach to the requirements that each SMS firm will have to meet.

Some companies, such as Spotify and Epic Games, have long sought government intervention to help fight against the app store fees imposed by companies like Apple. In a post published in response to the DMCC’s passing, Spotify says the UK should act to regulate Apple’s practices. “Apple has spent millions — in country after country—trying to circumvent and make a mockery of laws like the DMCC,” Spotify CEO Daniel Ek says in a statement. The DMCC has the potential to unlock real competition and growth and Apple must be held accountable in the U.K. because we cannot miss the opportunity to get it right.”

Apple has faced criticism over its response to the DMA, and the European Union has already opened an investigation to evaluate whether the company’s complying with the region’s new rules.

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