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Google, Facebook and Amazon face new UK regulator

by John Saunders
15th Apr 21 3:31 pm

The UK is poised to introduce a new regulator in a bid to check the power and dominance of tech giants like Google, Facebook, and Amazon.

Known as the Digital Markets Unit(DMU) it will form part of the Competition and Markets Authority.

Its first major task will be to create new codes of conduct for leading technology companies to govern their relationships with their users, whether that is small businesses looking to advertise, or news organisations wanting to distribute their journalism.

However, for its actions to have teeth, the DMU will have to wait until these codes have been passed into UK law.

The introduction of the regulator is a direct challenge to the current position of the tech firms who the UK government believes distorts the competitive position, holding, as they do, a large share of the market when it comes to digital advertising revenue.

And it can also be regarded as the latest shot across the bows of the tech firms in a long-running battle against their virtual monopoly position. European governments, for example, are deeply unhappy that, despite making vast profits in their countries, these US-owned organisations pay very little tax locally.

Meanwhile, in Australia earlier this year, a major row between Facebook and the country’s government saw the online media platform temporarily ban local users from sharing or viewing news content on their platform. That was in response to proposed laws that would make tech giants pay for such content.

Eventually, a compromise was reached and Facebook restored the service in exchange for paying a modest sum for the right to post content.

But for some, it only served to underline how powerful Facebook had become, with more than 11 million Australians relying on it as their primary source of news.

Amazon, meanwhile, has enjoyed a record year as profits and revenues have boomed during the pandemic.

They are one of the businesses that have flourished as consumers, forced to stay at home during the global health crisis, have been forced to go online to buy the goods and services they need, denied access to their usual bricks and mortar shops.

They are not the ones to have prospered. Whilst physical casinos have been forced to shutter their doors for months on end, the online operator has boomed, with growing customer numbers turning to them for entertainment, escapism, and also for the social interaction some games provide.

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Small retailers have long complained of the competitive power of Amazon anyway, with their competitive pricing and ability to fast ship almost anywhere in the world.

Small business groups in the US have been lobbying Congress to act, arguing the behemoth abuses its market size to effectively block small businesses from competing against it.

One of the ways that Amazon does this is by selling its products alongside those from smaller, third-party retailers, which is essentially a conflict of interest. Amazon can glean a lot of information about which of their competitors ‘products are the most successful, and tailor their offerings appropriately.

At the same time, they have a vast amount of customer data which they mine to predict consumer buying habits and to make targeted suggestions to them about other items they might want to purchase.

Some might argue that regulators trying to harness the power of the tech giants is a bit like the myth that once surrounded the old English King Canute, that he could control the power of the sea, something that he then had to disprove to his gullible courtiers,

However, if the new regulator helps to at least curb some of their worst excesses, then consumers, the media, and other businesses might experience some benefit.

 

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