Over to you: the CMA hands the baton of UK digital regulation to the new Digital Markets Taskforce

On 1 July 2020, the CMA published a Report, which concludes a year-long market study into online platforms and digital advertising in the UK.  The CMA confirmed its recommendation in the Interim Report not to refer to a market investigation (i.e. an in-depth investigation into potential market concerns). 

Instead, the Report makes a case to tackle concerns about digital markets through a pro-competitive regulatory regime.  It is envisaged that this regime (to be enforced through a yet-to-be-named body) will have two parts:

• A mandatory Code of Conduct: platforms deemed to have “strategic market status” (SMS) will need to comply with principles focused on fair trading, trust and transparency and open choices.  To ensure that these principles are relevant and practical, an individually-tailored Code will be developed for each SMS platform and detailed guidance will be published.
• Pro-competitive intervention powers: the Report recommends that the new regulator is given powers to implement additional “transformational” interventions to tackle market power.  While it is clear from the Report that more work needs to be done to determine what interventions are needed and how these would work, the CMA suggests intervention powers should include the ability to:
  • Restrict platforms’ ability to acquire default search positions and/or impose choice screen requirements;
  • Require sharing of click-and-query data with third parties;
  • Require platforms to allow consumers to use at least a basic version of their service without personalised advertising;
  • Mandate interoperability (e.g. of contacts and cross-posting functionalities) on social media platforms;
  • Order structural or operational separation of ad tech functions and/or inventory for vertically integrated players;  
  • Take measures to increase transparency of fee and transactions data in ad tech.

The end of the market study is not the end of the road for the CMA.  The CMA will lead the Digital Markets Taskforce (DMT) in formulating recommendations to government, building on the findings of the Report.  The DMT has already kicked off this process with a call for stakeholder submissions on the proposed regulation by 30 July 2020.  The DMT will deliver its recommendations to government by the end of the year: the CMA warns that if the government doesn’t take these recommendations forward in “good time”, the CMA stands ready to take action on its own through a market investigation.