'Bullying tactics' by tech market leaders harms consumers

The increasing dominance of tech giants "is limiting competition and consumer choice and innovation", a new independent review has warned the government.

However, the review's lead author stopped short of supporting Senator Elizabeth Warren's plan to split up the tech companies, saying the UK "can do better".

Former Barack Obama economic adviser Jason Furman was asked by the Treasury in September 2018 to lead an investigation into competition in the digital marketplace.

His review, which is published today, concluded that the lack of competition for tech monopolies such as Facebook, Amazon and Google was harming consumers.

Image:Former Obama economic adviser Jason Furman has led an investigation into competition in the tech world

"A few companies are dominating lots of markets," Mr Furman told Sky News, "and when you don't have a lot of competition you don't have much consumer choice, you don't have as much quality you don't have as much innovation."

Asked if that meant the tech giants should be broken up, Mr Furman doubted whether the UK was even capable of such a move.

"It's not really an option for the UK," he said. "If the UK wanted to break up Facebook, I'm not sure Facebook would really listen."

Instead, he proposed a set of "pro-competition" reforms to encourage more companies to compete with the tech giants.

Mr Furman and his co-authors called for a new "digital markets unit" to set and enforce the rules of the digital marketplace, which they suggested should be clarified in a code of conduct.

Image:Senator Elizabeth Warren wants to split up tech companies

To account for future technological change, the panel advised that the new unit should be given legal powers to stop predatory mergers and tackle "bullying tactics by market leaders".

"Over the last 10 years the five largest firms have made over 400 acquisitions globally," the review noted.

"None has been blocked and very few have had conditions attached to approval, in the UK or elsewhere, or even been scrutinised by competition authorities."

The expert panel also proposed changes to existing rules, with 11 of the 20 recommendations focused on the Competition and Markets Authority (CMA), the body currently charged with protecting competition in the UK.

The review proposed, for instance, that the CMA "should further prioritise scrutiny of mergers in digital markets" and update its Merger Assessment Guidelines "to reflect the features and dynamics of modern digital markets".

CMA chief executive Andrea Coscelli said that technology was "creating new challenges which require a response. The expert panel's report provides invaluable insight into these challenges and how they might be addressed by updating the UK competition framework."

As well as setting and enforcing the rules of the digital marketplace, the expert panel proposed that the digital markets unit "be given powers to force the largest companies to open up to smaller firms through providing access to key data sets."

This approach has been used to encourage innovation in financial technology, by forcing the big banks to open up their data, a reform known as Open Banking.

Image:Jeni Tennison, chief executive of the Open Data Institute

Jeni Tennison, chief executive of the Open Data Institute, welcomed the move, but warned that its effects were likely to be slow.

"Sharing data is one aspect of trying to stop real dominance of the web by a few big firms," Ms Tennison told Sky News. "I don't think that on its own is enough."

"The impact is going to be long term -- as long as the government takes into account these recommendations and actually uses the powers that are recommended."

Alongside Mr Furman, the panel on digital competition comprised economist Diane Coyle, competition specialists Amelia Fletcher and Philip Marsden, and computer scientist Derek McAuley, a leading authority on data portability.

(SKY NEWS)