The Competition and Markets Authority (CMA) today published its joint opinion with Ofcom following a request from the government which explains how consumers and content providers, including newspapers, could benefit if the power of the biggest tech companies is properly managed. The advice was provided to the government in November 2021 and is now published alongside the government’s response to the digital markets consultation. It provides an example of how the government’s proposed new regime to limit the power of big tech platforms could work in practice.
The notice explains how a code of conduct, if introduced into law, would mean that large tech companies with significant bargaining power would have to agree fair and reasonable terms for the content they use on their platforms. . It identifies a number of ways to do this, such as: – addressing concerns about the transparency of how algorithms work and the factors used to determine where content from different publishers appears in searches; – give publishers appropriate control over the presentation and branding of their content; – promote the improvement of practices for sharing user data between publishers and the platforms that host their content; and – redress the imbalance in the balance of power in the negotiations between publishers and the largest platforms, by regulating fair financial conditions for publishers’ content when it is hosted by the largest platforms with the power to significant market.
Under the government’s proposals, the code would consist of a set of legally binding obligations for the biggest tech companies outlining how those companies should behave when dealing with consumers and businesses, including publishers. In the event of a dispute between a platform and a publisher on the application of a code, the Digital Markets Unit (DMU) would be responsible for ruling on the compliance of a contract or behavior given by the company. As noted in the notice, along with more traditional enforcement powers to ensure compliance, the DMU should be given supporting enforcement power to impose binding arbitration to ensure code violations do not persist. not for long periods of time and prompt quick resolutions.
The CMA expects this code to be coupled with other pro-competitive interventions, such as requiring different services to work together, or for consumers to have a choice rather than being sent by default to the product of support from the same company. Such interventions would help directly address the sources of these platforms’ market power and address market characteristics such as barriers to entry that prevent challenger technology firms from driving competition and innovation.
The opinion – produced jointly by the DMU, which is part of the CMA, and Ofcom – sets out the authorities’ view of how a code of conduct could work in the specific case of the relationship between platforms and content providers, including news publishers.
Other countries, such as Australia, have recently embarked on their own efforts to level the playing field between platforms and publishers. One of the main differences between the Government’s proposals and the Australian approach to news media is that the SMS regime in the UK is broader in scope. The codes of conduct of the biggest technology companies are expected to shape their behavior and reduce the imbalance of bargaining power in a range of digital markets. Today’s notice sets out CMA’s current thinking on what guidelines on assessing fair and reasonable compensation for content under the SMS regime should look like. It also discusses how approaches like the one taken in Australia could incentivize compliance with conduct requirements that may be imposed on larger tech companies by the DMU in the future.
Andrea Coscelli, Chief Executive Officer of CMA, said:
Online platforms and news publishers play a vital role in how we read and understand what is happening in the world, which is why it is right that the media be treated fairly by the platforms that use and share their content.
Our notice published today clearly explains how unifying digital markets could create a more level playing field between platforms and publishers. These include making sure the platforms are more transparent about how their algorithms work and defining the steps that could be taken in the event of a disagreement between companies over payments.
We are ready to help the government introduce the necessary legislation for the MISP as soon as possible. In the meantime, we will not hesitate to examine the behavior of big tech companies and use our existing powers to the fullest.
Dame Melanie Dawes, Chief Executive of Ofcom, said:
Having a wide range of sources of information and opinions is the cornerstone of our democracy, our values and our society. Today marks an important step towards achieving a fair outcome in the relationship between online platforms and news publishers.
The way people use digital channels to communicate and obtain information is changing rapidly. We’re taking a closer look at the potential benefits and threats to media plurality, and we’ll have more on that later in the year.
Notes to Editors
For media enquiries, contact the CMA Press Office on 020 3738 6460 or [email protected]
The government is proposing a new pro-competitive regime for digital markets, including enforceable codes of conduct applying to digital companies designated as having strategic market status (SMS). Since the joint opinion of the CMA and Ofcom was submitted to the government in November 2021, the thinking on the legislative framework has continued to evolve. Therefore, the language of the advice in terms of the ‘principles’ of the code does not necessarily correspond to the language of the response to the consultation on ‘conduct requirements’. However, the two can be read interchangeably for these purposes.
The SMS test, for companies with strategic market status, is subject to final legislation. As outlined in the government’s response to the consultation, we expect the test to focus on identifying substantial and entrenched market power that allows the company to act strategically. in previous CMA projects such as market research on online platforms and digital advertising and market research on mobile ecosystems. The DMU will consult transparently on its decisions to designate companies as having SMS.
The joint CMA and Ofcom advice to government was provided following a request from the Digital Secretary in April 2021 for the CMA’s non-statutory Digital Markets Unit (DMU) to work with Ofcom to “examine how a code would govern relationships between platforms and content providers such as news publishers, including to ensure that they are as fair and reasonable as possible”. New watchdog to boost online contest launches.