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April 7, 2021updated 30 Sep 2022 10:11am

UK launches Digital Markets Unit watchdog for Google and Facebook with warning over Australia-style payments regime

By Charlotte Tobitt

The UK has launched a “tough” new online watchdog tasked with looking at how a code of conduct could govern the relationships between platforms and content providers.

However the Digital Markets Unit is in a “shadow” non-statutory form until legislation is passed “as soon as parliamentary time allows” – likely within a year.

Its full powers will then be granted, allowing it to enforce a new pro-competition regime covering tech giants like Facebook and Google.

Digital and Culture Secretary Oliver Dowden has asked the unit, set up within the Competition and Markets Authority, to look at the relationships between platforms and content providers, and platforms and digital advertisers.

“This will pave the way for the development of new digital services and lower prices, give consumers more choice and control over their data, and support our news industry, which is vital to freedom of expression and our democratic values,” Dowden said.

This process will look at how a code of conduct could govern these relationships and ensure they are “as fair and reasonable as possible”, the Government said. Broadcast regulator Ofcom, which has been given further powers to regulate harmful online content, will be involved in this process.

Digital Markets Unit will ‘stand ready’ for action

Speaking to Sky News, Dowden said a payment mechanism, like Australian proposals to force platforms to pay for news, could be “one of the things they may want to consider” but that this would not happen immediately.

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“I think actually even the process of actually doing this forces some proper commercial negotiations between the platforms and the providers of content because ultimately I would rather the Government doesn’t have to intervene in this, they can provide a commercial solution but if they can’t, we stand ready to take the appropriate actions,” he said.

Dowden added that the tech giants have effectively been put “on notice” to take action on any potential abuses of their market position.

The Government said this would be the latest step in its work to ensure the sustainability of the press, citing the Cairncross Review and the support given during the Covid-19 pandemic in the form of advertising and business rates relief.

[Read more: Institute for Public Interest News, innovation fund and tax reliefs among nine proposals to save UK news industry in Cairncross Review]

The News Media Association, which champions national and local media, has previously said it would work with the Government and regulators to shape the Digital Markets Unit “to ensure that the legal and regulatory regime transforms the relationship between the tech platforms and news publishers”.

The unit’s first year will see it compile evidence, knowledge and expertise so that once the new pro-competition regulatory regime is in place it can begin operating as quickly as possible.

It will be led by Will Hayter, who has been leading the UK’s exit from the EU since September within the Cabinet Office and has previously worked at both the CMA and Ofcom.

In November, as the DCMS announced the proposals for a Digital Markets Unit, the House of Lords Communications and Digital Committee urged such a unit to be created “as a matter of urgency” to fix the “fundamental imbalance of power” that threatens the future of journalism.

The UK move comes as part of a growing regulation backlash whereby governments around the world are looking to tame the dominant position of Google and Facebook in advertising markets.

At the same time the two tech/media giants are each spending $1bn over the next three years to pay for news content on their platforms and win friends in the news industry.

Australia came close to forcing Google and Facebook to pay news publishers for content, but pulled back after Facebook abruptly banned all news content from its platform in the country.

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