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Digital markets bill will stifle innovation, claims think tank

Digital markets
Big Ben and House of Parliament at dusk with clouds from Westminster Bridge - London - UK

The digital markets bill risks undermining investment, innovation and the rule of law, according to a new paper from a free market think tank.

The Digital Markets, Competition and Consumers Bill proposes giving the UK’s competition regulator greater powers to police the actions of Big Tech firms such as Amazon, Alphabet and Meta.

But giving the Competition and Markets Authority (CMA) the additional powers laid out in the proposed bill will harm growth, the Institute of Economic Affairs (IEA) along with the International Center for Law and Economics (ICLE) have warned.

According to the paper, which has drawn support from several MPs, the proposed law undermines the UK government’s “science and tech superpower” goals

It claims that the bill would give the CMA far greater discretionary powers than its competition regulator counterparts in the EU, leading to a situation in which the UK is seen as a less attractive place to do business as a large tech firm.

Furthermore, it suggests that products and services from large firms will not be developed in the UK and their rollouts in the British market would be either delayed or scrapped altogether to avoid CMA scrutiny.

The paper gave the example of Google being “prevented from highlighting its maps service” for UK consumers and Apple reducing the security of iMessage by “making it interoperable with other messaging services”.

CMA under scrutiny

The role of the CMA in governing the actions of Big Tech has come under question this year after the UK was labelled “closed for business” by video game publisher Activision following the decision to block its acquisition by Microsoft.

“At a time of growing disquiet about the performance of our regulators it is clear that Parliament is failing to hold them to account adequately,” said Tory MP Richard Fuller, who provided support for the think tank’s report.

“Digital markets surely are crucial for our growth and competitive forces will best drive that growth in the interests of all consumers.

“The CMA is the right regulator but, as this paper makes clear, the powers being delegated to the CMA are too broad, too ill-defined and too restrictive to challenge.”

A government spokesperson told UKTN: “We reject these claims. The UK is already the best place to invest in tech in Europe, as the third economy in the world to have built a $1 trillion tech sector, backed by our unwavering support like record-breaking investment and global advocacy.”

The spokesperson said the bill will “unleash a new wave of innovation” and “make sure every tech business has the opportunity to succeed”.

Last year, MPs in a report from the Business, Energy and Industrial Strategy (BEIS) Committee urged the government to back the bill.

The then chair of the committee, Labour MP Darren Jones, said at the time: “There are many areas in the economy where stronger competition is required in the interests of consumers, small business and economic growth and this bill is an essential stepping stone to driving this issue forward.”

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