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The UK’s Competition and Markets Authority (CMA) is introducing a new bill that could lead to multibillion-pound fines for major tech companies like Apple, Amazon, and Google for breaching its rules. The multifaceted bill is designed to promote competition and protect consumers by giving the CMA the authority to tackle the “excessive dominance” of tech firms.
Under the new legislation, tech companies that have “strategic market status” in key digital services will be required to comply with its rules, or the agency’s Digital Markets Unit (DMU) could impose significant fines. The CMA has not named which firms with “strategic market status” it will be monitoring, but a threshold will apply, meaning that only firms with a global turnover above £25 billion or a UK turnover above £1 billion will be in scope.
The government has said that firms falling under this definition, such as Apple, Google, and Amazon, could be required by the DMU to be more transparent about how their app stores and review systems work, and the agency would have powers to open up a specific market depending on the situation. For example, Apple could be told to allow iPhone and iPad users to download apps from alternative app stores, or if it was a search engine like Google, they could be forced to open up their data to rivals.
The legislation also aims to tackle “subscription traps”, where businesses make it difficult for consumers to cancel a contract. Under the new rules, companies would be required to remind consumers when a free trial or low-cost introductory offer is coming to an end and ensure that a contract can be canceled in a cost-effective, straightforward way.
If firms don’t abide by the rules set for them, the DMU will have the power to fine them up to 10% of their global turnover and make senior managers personally responsible for ensuring their company complies with the DMU’s requests. As a ballpark figure, Apple earned $283 billion in revenue for 2022, so any hypothetical fine could be worth up to $28.3 billion.
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The bill has been in the making since 2021 and will be heard in Parliament on Tuesday. The new measures will come into effect following parliamentary approval, subject to secondary legislation and the publication of guidance.
“From abuse of power by tech giants to fake reviews, scams, and rip-offs like being caught in a subscription trap – consumers deserve better”, said Business and trade minister Kevin Hollinrake. “The new laws we’re delivering today will empower the CMA to directly enforce consumer law, strengthen competition in digital markets, and ensure that people across the country keep hold of their hard-earned cash”.
