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Too few competitors for tech giants limiting innovation, says review

technology

13 Mar 2019

An independent review has ruled that UK competition rules must be updated to account for the digital age, finding that there is not enough competition for tech giants and a new markets unit is required to set up and enforce rules.
Cassie Sims

The review, published today, has found that tech giants do not face enough competition and calls for ministers to open up the market to increase consumer choice and foster innovation.

Harvard Professor Jason Furman, Chair of the review, warned that the UK needs to update its rules to be fit for the digital age. By strengthening outdated laws and setting up a new competition unit, he believes more companies could join the market. This would prompt a new wave of innovation, particularly in the creation of new social media and online search platforms.

The independent panel gave 20 specific recommendations including:

  • Setting up a new digital market with expertise in technology, economics and behavioural science
  • Giving people more control over their data allowing freedom to switch between platforms
  • The development of a code of conduct so that even the largest digital companies know the competitive rules
  • Changes to merger rules so that the Competition and Markets Authority (CMA) can prevent potentially damaging digital mergers
  • Giving powers to force the largest companies to open up to smaller firms by sharing key data sets, where privacy is not affected
  • The UK engaging internationally on all of these issues

‘The digital sector has created substantial benefits, but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation. Some say this is inevitable or even desirable. I think the UK can do better,’ said Professor Furman.

The report was commissioned by Chancellor Philip Hammond on behalf of the government, ahead of his Spring Statement, also today (13 March 2019). Responding to the review, he said: ‘The work of Jason Furman and the expert panel is invaluable in ensuring we’re at the forefront of delivering a competitive digital marketplace.

‘I will carefully examine the proposals put forward by the panel before responding later this year, setting out how the government will implement the changes needed to ensure our digital markets are competitive and consumers get the level of choice they deserve.’

The government will now consider the recommendations and implement changes to open up the digital market, which are hoped to lead to new innovations that revolutionise how we use digital apps and programmes.

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