UK digital markets watchdog given power to fine big tech firms

The UK government has outlined the powers of its new digital regulator, the Digital Markets Unit (DMU), which will have the authority to issue fines of up to 10% of a company's annual turnover.

The new powers are part of a proposal that aims to help British startups compete against the tech giants that dominate the market, such as Google and Amazon.

The DMU was launched in April and sits within the Competition and Markets Authority (CMA). It will work alongside tech firms to "inject" stronger competition into the digital sector, according to the government.

The unit will be given powers to "designate" tech firms that hold substantial and entrenched market power with 'Strategic Market Status' (SMS) which will force them to follow new rules within the market. These rules are still in a proposal stage, but could include a ban on pushing customers into using default or mandatory services, or blocking third-party firms.

The proposals will be underpinned by powers of investigation and significant penalties, such as the 10% fine. In addition, the DMU will also have the authority to suspend, block and reverse code-breaching behaviour by tech giants. As an example, the government cites unfair changes to an algorithm or Terms and Conditions that either impact the consumer experience or affect a rival company.

The DMU will also look at the root cause of competition issues in the digital market, which could result in measures to support interoperability, essentially forcing digital platforms to be more compatible with each other.

"The UK's tech scene is thriving but we need to make sure British firms have a level playing field with the tech giants, and that the public gets the best services at fair prices," the digital secretary, Oliver Dowden.

"So we will be giving our new Digital Markets Unit the powers it needs to champion competition and drive growth and innovation, with tough fines to make sure the biggest tech firms play by the rules."