Plan to revamp DMU could stifle UK’s digital innovation, report claims


Innovation, investment, and overall growth of UK businesses could be stifled if the government goes ahead with the plan to grant new regulatory powers to the Digital Markets Unit (DMU), a new report has claimed.

The DMU currently operates on a non-statutory basis within the Competition and Markets Authority (CMA). However, the plan is to eventually enact legislation to give it the authority to regulate national and international digital firms.

A report from the Institute of Economic Affairs (IEA) has claimed a fully operational DMU could discourage innovation through the over-regulation of UK startups.

The IEA suggested that successful firms in the UK need to be supported, rather than face overly restrictive regulation.

“Instead of trying to micromanage successful businesses, the government should be addressing the barriers to entry faced by challenger firms from regulations like the GDPR,” said Victoria Hewson, head of regulatory affairs at the IEA.

The report recommended halting the legislation that would extend the DMU’s powers until more research can be done.

The DMU was established as a way to curb the ability of the largest tech organisations to dominate markets and prevent competition from smaller digital firms.

The Bank for International Settlements (BIS) called for nations to support the regulation of Big Tech over data harvesting concerns in a paper in May.

The government has yet to say when it will introduce the legislation to empower the regulator, however, it was briefly mentioned in the Queen’s Speech in May.

Dr Cento Veljanovski, IEA law and economics fellow said: “The delay in giving the CMA new powers to regulate the tech companies provides the opportunity to reflect on how best to ensure competition in the sector.

“There is no need to rush to regulate badly as seems to be happening elsewhere in Europe.”