This lecture gives an insight into the Digital Markets Unit’s (DMU) first months in operation and how regulatory and competition policy in this critical area will be developed.
The Beesley lectures are an excellent place to take on the important challenges posed by regulating digital markets, as a forum that has hosted dialogue on cutting edge competition and regulatory issues for 30 years.
In the course of my talk, I first want to remind us all of the ways in which digital markets are not functioning as well as they should.
Second, I want to talk about the UK’s response to these problems, particularly the Digital Markets Unit (DMU) and the government’s proposals for the pro-competition regime for digital markets that the DMU will oversee.
I then want to set out for you the DMU’s priorities in preparing to take on the role of overseeing the pro-competition regime for digital markets.
Finally, I want to talk about some of the recent cases the Competition and Markets Authority (CMA) has taken forward on digital markets.
First then, I want to remind you of why we are having this discussion this evening. Digital markets have come to play a central role in our personal, economic and social lives. For many people, this trend has substantially quickened over the last couple of years, as the pandemic has led us to live, work and consume online more than ever before. In 2020 the average time spent online by UK adults reached 4 hours a day – a new record, with activities like video calls with friends and family and remote working becoming part of daily life for many of us. Digital markets have also opened up exciting new opportunities for businesses to innovate and reach new customers, and for buyers and sellers to find each other in ways that were not previously possible. The UK has been at the forefront of this wave of innovation: we are Europe’s leading producer of tech ‘unicorns’, now one of only three countries to have more than 100. You can see then that digital markets are critical for economic growth and fostering innovation; for delivering great new opportunities to consumers and businesses; and for our personal and social wellbeing as individuals.
And this is why it causes grave concern when digital markets are not working as they should. We can see increasing evidence that the competitive forces in some digital markets are weakening. A small number of very large firms now hold extremely powerful positions in key digital markets.
Having fortified their positions, these large companies are now able to dictate, direct or influence many digital markets from their strategic position. They are able to shape consumer choices by deciding how and when consumers are presented with information. They set the terms and conditions to which businesses must agree to access the market. They decide how to use consumers and businesses data, often with little regard to data privacy considerations, fair and reasonable contract terms or wider harms. And they can exercise this great influence largely unconstrained by competitive forces.