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There was a very good attendance last week for Lexington and FIPRA International’s webinar on the UK’s approach to digital competition.

Coinciding with the Competition and Markets Authority’s final report from its digital advertising market study, our audience heard three experts debate what will happen next and how the industry should respond. They were:

  • Baroness Lucy Neville-Rolfe, former BEIS, Treasury and DCMS minister
  • Professor Philip Marsden, Furman Review member and ex CMA director
  • Dr Rocio Concha, Chief Economist and Head of Strategic Insight at Which?

We identified a number of themes that communicators should be thinking about …

 

#1 There is global consensus about reforming digital regulation, but how?

All our panellists agreed the large tech platforms have been valuable to consumers – bringing innovation to our fingertips and driving forward the digital economy. Despite this, it was no surprise to hear general agreement about a growing international consensus in favour of new digital competition regulation. Indeed, the COVID-19 pandemic has pushed consumers further towards digital markets and services, making it inevitable that some changes to policy will be required. The genie cannot be put back in the bottle, so to speak.

However, despite a degree of convergence between the UK and global partners such as the EU, the international dimension of digital markets is a challenge. In all forms of technology regulation, the key players are global businesses and this necessitates a coordinated approach. But some of our panellists were concerned that waiting to reach international agreements could delay regulatory reforms for years.

 

#2 The UK government is under significant pressure before it takes action

The most significant challenge in the UK, for those favouring a new system, is to persuade government to take action. Ministers have been keen to present the UK as a world leader in regulating the internet, most particularly to address online harms, but progress has been delayed. This is despite significant momentum behind recommendations for reform of the competition regime, particularly as online platforms have come under scrutiny from policy makers for example, over personal data use, choices and protections given to consumers.

However, like any other major government initiative, recommendations for reform need to be assessed in light of Brexit and COVID-19. Will they go ahead and in what form?

The government is waiting for advice from its Digital Markets Taskforce about implementation of a new competition regime. This will have reference to recommendations from Jason Furman’s digital competition expert panel, which the government accepted earlier this year. Those proposals ranged from an overarching code of competitive conduct for the largest platforms, to significant increases in transparency on algorithms and data usage, improved interoperability between platforms and a duty to enforce a fairness-by-design standard. There are a number of questions about how this could be enacted which need to be addressed, especially with other regulatory initiatives in the frame too.

Whichever path the government chooses, new regulation will require complex legislation. However, parliamentary time is at a premium while ministers grapple with the economic recovery and geopolitical considerations such as the US trade deal negotiations could also be a factor. As a result, the government may be hesitant to make significant interventions in the short-term.

 

#3 … so interested parties need to marshal their arguments now

This means that interested parties need to persuade policy makers and mobilise stakeholder support for position on digital markets policy. The current administration has not been shy of interventionist approaches or radical reforms to the structure of government. The question is whether regulation of digital markets will be a priority. Arguments need to be focused on what will benefit businesses, consumers, investment in the UK and drive opportunities for economic growth after COVID-19.

 

#4 Will we see post-Brexit interventions backing UK tech?

Finally, we saw an interesting suggestion about the UK’s role in the world after Brexit. There has been much made of our ability to develop promising technology startups, something which Lexington’s current stakeholder opinion research in the AI sector is exploring. However, there is sometimes frustration at our ability to create ‘blockbuster’ multinational tech companies. Indeed, the very largest players in digital markets often come from overseas.

Although by no means critical of foreign investment and innovation, we heard some suggestions that the UK government might consider moves to shore-up UK technology businesses as part of its response to the pandemic. BEIS ministers have already taken steps to achieve this by introducing proposed reforms to the Enterprise Act 2002 which give government wider powers to investigate takeovers of tech firms. Could ministers offer further support the domestic digital economy as one of the drivers of the recovery?

 

To discuss any of the issues raised in this article or the webinar, please contact Lexington’s Creative, Technology and Telecoms team on tech@lexcomm.co.uk

Written by Francis Mallinson, Associate Director, specialising in public affairs and policy communications for key players in the technology, transport, infrastructure and urban environment sectors.

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