The balance of power between the tech biants and news media publishers is on the verge of shifting in the UK with a new, dedicated Digital Markets Unit (DMU) and pending legislation to establish a digital platforms code of conduct.
According to a November policy paper released by the government, “A new pro-competition regime will form a key part of our forthcoming digital strategy, where we will set out our overarching approach to regulating digital technology.”
The DMU’s charter
The unit will operate as a smaller arm of the Government’s Competition and Markets Authority (CMA), and its mission will be to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market, such as Google and Facebook, according to a late November press release jointly issued by the Departments for Business, Energy, & Industrial Strategy and for Digital Culture, Media, & Sport, as well as Business Secretary and The Right Honourable Alok Sharma, MP, and Culture Secretary and The Right Honourable Oliver Dowden CBE MP.
“Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives — whether it’s helping us stay in touch with our loved ones, share creative content, or access the latest news,” Sharma said Sharma. “But the dominance of just a few Big Tech companies is leading to less innovation, higher advertising prices, and less choice and control for consumers. Our new, pro-competition regime for digital markets will ensure consumers have choice and mean smaller firms aren’t pushed out.”
The key points are:
- The government will set up the DMU to oversee a pro-competition regime for platforms including those funded by digital advertising, such as Google and Facebook.
- The new statutory code of conduct will mean consumers will be given more choice and control over how their data is used, and small businesses will be able to better promote their products online.
- The code will support the sustainability of news publishing industry, helping rebalance the relationship between publishers and online platforms.
The DMU and news media publishers
Of particular interest to news publishers is the attention given to their plight in the joint release:
“Currently, dominant online platforms can impose terms on news publishers that limit their ability to monetise their content — severely impacting their ability to thrive.
“The new code will govern commercial arrangements between publishers and platforms to help keep publishers in business — helping enhance the sustainability of high-quality online journalism and news publishing in the UK.
“It will form a major part of the government’s work to support the sustainability of the UK’s world leading news publishing sector and make sure, as news moves ever more online, publishers get a fair deal from the platforms on which they rely.”
“As more and more news moves online, we want to make sure our world-renowned publishers get a fair deal from the tech platforms so we can help guarantee their long-term sustainability.
“Today we are announcing plans that will benefit news publishers by preventing the application of unfair terms, conditions and policies by the tech firms using their content. This is a really important change to help bolster the news industry.”
Mark Challinor, CEO mediafuturesltd.com and INMA executive Webinar producer, was both optimistic and cautious about the situation. “As this is all about greater fairness around the commercial deals between publishers and platforms, I can only applaud the idea. However, what we don't know yet is how transparent and effective the whole process will be.
“The CMA says that the new regulator could be given powers to audit and scrutinise the workings of ‘opaque algorithms.’ Note key word ‘could.’ Publishers always need to have an ‘eyes open’ approach to relationships with the tech platforms as significant algorithm changes can have a damaging financial effect and the changes usually come too fast to be able to plan around them. So, the transparency has always been seen as suspicious.
“It's a dilemma as the likes of Facebook and Google are nevertheless important for publishers’ online businesses.”
The November press release also noted that there is evidence of broader social harms due to weak competition, such as the negative impact on the quality of journalism, in line with the findings of the February 2019 Cairncross Review, by Dame Frances Cairncross.
That review recommended introducing “codes governing the relationships between online platforms and news publishers, which will be a key step in ensuring the sustainability of high-quality journalism and news publishing,” as noted in a November government policy paper. (The formal Government response to the review, dated January 2020, can be found here. The November 2020 inquiry into the future of journalism from the House of Lords Communications & Digital Committee also referenced the review.)
“A growing consensus”
“There is a growing consensus in the UK and abroad that the concentration of power amongst a small number of tech companies is curtailing growth in the tech sector, reducing innovation, and potentially having negative impacts on the people and businesses that rely on them,” the press release said. “The new code will set clear expectations for platforms that have considerable market power — known as strategic market status [SMS] — over what represents acceptable behaviour when interacting with competitors and users.”
The DMU, set to begin work in April, will possibly have “powers to suspend, block and reverse decisions made by technology firms and impose financial penalties for non-compliance,” Reuters reported. It will be “informed by the work of the Digital Markets Taskforce, which was set up [in March] to provide advice to the government on the potential design and implementation of pro-competitive measures — including the methodology which will determine what companies should be designated as having strategic market status, and how a regime would work in practice,” according to a government release. The government response, as outlined in a November policy paper, said “a non-enforceable code would not provide sufficient incentives to deter anti-competitive behaviour.”
Challinor agreed an enforceable code has the possibility of meeting publisher needs for fairness but noted that nothing is written in stone yet.
“All publishers want is fairness,” he said. “In a world where Facebook and Google now dominate the digital advertising market and where Facebook’s Instant Articles/Google’s Accelerated Mobile pages are built to keep readers within the platforms’ own Web sites, the question is, what is fair?
“The CMA says that an enforceable/accountable code of conduct may (note that word, ‘may’) help address these worries. It said some of the code’s principles could (note,’could’) relate to ‘fair trading, open choices and trust and transparency.’ Let's hope so? But while there is suspicion and vagueness in abundance, the news industry will remain cautious,” he said.
But, as The National Law Review suggested: “The devil will be in the details of what the new code will require, and questions remain about what specific conduct the DU will target and what actions it will take. Will it require the companies to pay license fees to publishers for presenting previews of their content? Will the unit reduce the user data the companies may access, something that would threaten their ad revenue? Will Facebook and Google have to share data with competitors?”
The 2020 report of the Digital Markets Taskforce was part of a series of steps to promote competition, including both the 2019 Cairncross Review and the 2018 Furman Review, commissioned by the government and authored by the Digital Competition Expert Panel, chaired by Jason Furman, former chief economist to U.S. President Barack Obama. It proposed a new pro-competition regime for digital platform markets in its 150-page final report.
The government accepted the Furman’s six strategic recommendations in a March report. Those were:
- Establish and resource a digital markets unit, tasked with securing competition, innovation, and beneficial outcomes for consumers and businesses.
- Take more frequent and firmer action to challenge mergers…supported by legislation where necessary.
- Enforcement tools against anti-competitive conduct should be updated and effectively used.
- Monitor how machine learning algorithms and artificial intelligence evolves to ensure it does not lead to anti-competitive behaviour or consumer detriment.
- Conduct a market study into the digital advertising market encompassing the entire value chain.
- Engage internationally on the recommendations it chooses to adopt from this review, encouraging closer cross-border co-operation between competition authorities in sharing best practice and developing a common approach to issues across international digital markets.
What to look for next
The taskforce, which grew out of the Furman Review recommendations, is due to report by the end of 2020. After that, the government will consult on proposals for the form and function of the Digital Markets Unit in early 2021, drawing on industry and technical expertise, and legislate for pro-competition reforms as soon as parliamentary time allows.
As Challinor said, “Next move is with the government.”