UK Competition Watchdog to Scrutinize Big Tech

Updated: 2021-02-22 18:50:13

The UK’s competition watchdog is set to scrutinize Big Tech companies this year when it gains new powers independent of the EU, said Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA).

Last month, the CMA opened an investigation into Google’s “Privacy Sandbox” project, to determine whether the project will distort competition. Coscelli said that he expects more investigations to come.

“We are actively scanning the players, the complaints we have received, the cases that others are doing, what could be done in parallel with others, where are the gaps in the work the European Commission is doing,” Coscelli told the Financial Times.

“We certainly expect to open more cases during the course of this year,” he added.

The UK government announced last November that a dedicated Digital Markets Unit (DMU) will be set up within the CMA to regulate the behaviour of market-dominating online platforms and create more competition, giving smaller businesses and news outlets a chance to thrive.

“Until we have these new legal powers, if we want to achieve impact for consumers in the UK, we need to use our current [tools],” Coscelli said.

“There are quite a few cases against the digital platforms in Brussels today and a number of these cases include the UK market.”

When asked if the CMA would have intervened in the merger between Google and Fitbit if it had the power earlier, Coscelli said he couldn’t speculate what would have been done, but the new special merger regime “would have probably applied.”

“We’re quite skeptical of these sort of long-term behaviour remedies that were ultimately accepted by the European Commission in this particular case, and our concern is that it’s very difficult to monitor sufficiently and enforce this type of remedies,” he told the Financial Times.

Coscelli was also asked to comment on U.S. graphics processor company Nvidia’s bid for Arm, a semiconductor and software design company in the UK.

“Arm has a number of products that are in high demand in what is a very concentrated downstream market, and Nvidia is one of the key players there. So this is a vertical transaction in essentially two concentrated markets with significant barriers to entry and expansion,” he said.  “It’s a type of transaction that creates prima facie competition concerns.”

Since it’s a global transaction, Coscelli said, the UK will need to cooperate with other global agencies and a probe into the merger will require “a lot of work.” National security, although out of CMA’s jurisdiction, is a factor that “add complexity to the review process” in Arm’s case.

Coscelli said that Big Tech monopoly wasn’t considered a potential problem a decade ago because competition was thought to be “just one click away.”

“What we have learned,” he said, is that in some areas Big Tech companies have “very strong network effects, there are very strong benefits to scale, and just the sheer amount of information that has been collected historically.”

Coscelli said more intervention is required to level the playing field in order to give new companies space to grow.

Alexander Zhang contributed to this report.

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