The U.K.’s competition watchdog doesn’t just have GIFs on its mind.
The Competition and Markets Authority’s probe into Facebook’s acquisition of Giphy is the regulator’s latest move as it takes on a more high-profile role in regulating Big Tech.
In April, the authority created a new division within its ranks called the Digital Markets Unit, established to direct more resources into policing competition in the U.K.’s digital market.
One of its first ports of call will be creating new codes of conduct for major players like Facebook, Google and Amazon.
The CMA has featured in many headlines over the last year. In recent weeks, it put the kibosh on the merger between Seedrs and Crowdcube, two of the U.K.’s largest equity crowdfunding platforms.
It probed Amazon’s investment in Deliveroo, holding up the funding for months to assess its impact on food delivery in the U.K. It ultimately approved the deal.
The new digital unit appears to be a logical step for the watchdog as it prepares to clamp down harder on Big Tech.
Vijay Raghavan, a senior analyst at research firm Forrester, said that the CMA’s increased actions against big Tech fits into a global theme that’s been unfolding over the last few years, particularly in Europe and the U.S.
“The way the CMA has been operating and some of the decisions they have made as it relates to the Seedrs deal and the scrutiny that the Deliveroo deal was getting, I think that the theme you can see is around wanting to provide a level playing field,” Raghavan said.
The U.S. and the EU have been the two main players in investigating Big Tech firms in recent years, especially with the EU’s bumper fines and sanctions against Apple and Google.
“It certainly seems that the reach and the power that these tech companies have right now is getting more scrutiny. The amount of data they’re collecting on all of us needs to be understood better,” Raghavan said. “Here in the States, there was a lot of scrutiny with the big tech companies during the election and all of that.”
Post-Brexit oversight
Brexit has added an important dimension to the CMA’s modus operandi moving forward and how it operates outside the purview of Brussels.
At the end of March, the CMA published its annual plan that acknowledged the landscape it faces, with the authority saying that it is committed to “playing a bigger role internationally to promote competition and protect consumers.”
The annual plan follows a report submitted to the British government in November which observed that competition in the country’s economy has declined over the last 20 years.
It is amid this backdrop — coupled with the economic challenges that Covid-19 has wrought — that the CMA is taking on a greater role in policing global tech.
Stephen Whitfield, a competition partner at law firm Travers Smith, said this can mean two tracks in the U.K. and the EU, where tech companies must now consider two heavy-hitter watchdogs when trying to get a deal over the line.
“Brexit is a factor that plays into this. I think perhaps it represents an opportunity for a U.K. regulator. In cases which might otherwise have been retained at the European level, (a case) will now be capable of being pursued at the U.K. level even if they are also being pursued in Europe,” he told CNBC.
This growing tide of scrutiny against tech companies has been seen by the various probes launched by the European Commission. Europe wants to take an even tighter grip of the reins with the forthcoming Digital Markets Act.
Meanwhile, the U.S. has begun flexing more frequently against Big Tech, seen recently by the series of Congressional hearings where bosses of Facebook, Google, Amazon and others have been grilled on competition and misinformation.
However the Digital Markets Act has not passed yet nor have U.S. lawmakers passed any new federal laws targeting the sector.
The tide may be turning, but just how much teeth regulators on both sides of the Atlantic, including the U.K., will bare remains to be seen.
“I think one advantage that the CMA has, which has less to do with teeth and more to do with reach, is that it does have quite a wide or broad jurisdictional threshold so it can bring quite a lot of mergers within scope in a way that other regulators would struggle to do given the way their jurisdictional thresholds work,” Whitfield said.
