The United Kingdom’s antitrust watchdog on Tuesday said it would launch investigations into three areas of digital activity as the new Digital Markets, Competition and Consumers (DMCC) Act comes into full force — giving regulatory power over major players like Apple and Google.
While the Competition and Markets Authority (CMA) did not specify which companies would be investigated, under its strict strategic market status (SMS) designation, only the largest tech firms would be considered.
The announcement says two investigations would begin immediately and a third would begin in about six months. Once a company receives SMS designation, the CMA would have the authority to curtail practices like using access to customer data to gain unfair advantage, make it easier for consumers to switch providers, and more.
A CMA report released in November called out Apple and Google’s dominant market positions in mobile as potential investigation targets, saying a revenue-sharing agreement between the two companies stifled competition.
“We are committed to implementing the regime in a way that is predictable and proportionate, moving at pace whilst respecting fair process,” CMA Chief Executive Sarah Cardell said in a statement. “… The process for designing any interventions will also be participative and transparent, with the aim of keeping innovation-led markets open and bringing firms on the journey with us.”
The investigations will be complete within the statutory limit of nine months, the CMA said. Significant fines — up to 10% of the company’s global turnover — could be levied if the CMA finds a breach in consumer protection law.
US tech firms are facing increasing scrutiny from regulators abroad. The EU’s Digital Markets Act is also taking aim at antitrust concerns, with probes targeting Apple, Google, and Amazon in March. Possible fines could also reach 10% of those companies’ global turnover, potentially costing the companies billions of dollars.
CMA’s Impact on M&A, and US Firm Focus
In a blog post, lawyers with Morgan Lewis said the UK’s new rules could have a profound impact on potential mergers and acquisitions for the world’s leading tech companies.
“The UK CMA has gained a reputation in recent years as an aggressive and impactful antitrust enforcer,” lawyers Joshua Goodman, Omar Shah, R. Ryan Hoak, and Jack Ashfield wrote. “The UK DMCC only bolsters its powers and as such it is more relevant that ever to consider the role of and approach to the UK SMA as part of the global merger review process.”
Critics of newly granted antitrust regulation powers like DMCC say the rules discriminate against US firms and jeopardize investment and cooperation between countries. “Given that the United Kingdom’s digital sector accounted for nearly 1.9 million jobs in 2022 and contributed over [$174 billion] to the UK economy in 2020, the UK government should tread carefully,” writes Meredith Broadbent, a senior adviser at the Center for Strategic & International Studies, in a post.
InformationWeek has reached out to Google and Apple for comment and will update with any response.