This article is written by Preeti Pallavi Jena, from the School of law, KIIT University, Odisha. This article talks about the impact of digital platforms in the world and how it affects society.
The CMA (Certified Management Accountant), referred to as the consumer authority and also the UK’s principal competition, try to make sure the market fulfils the needs of the consumers for better business service as well as a better economy, which the government asks for and leads to a digital market task force expertising from Ofcom and ICO (Information Commissioner’s Office). The taskforce gives realistic advice to the government regarding the protection of the competition, creation in the digital markets and also see the anti-competitive effects which come from the market growth. This document also gets advice from the stakeholders.
Digital innovation puts a positive impact on our economy. It brings new and improved services to the market which will also be beneficial for the customers and increase the growth of their business by reaching new market levels through digital platforms. The task force’s suggestion will increase with the Furman Review. With this, the taskforce will concern more about the regulation of digital markets and develop them.
Rishi Sunak, the new chancellor gave his first budget statement according to which, competition creates better outcomes for the consumers. It is important for innovations and it also allows new people to the market for growth. In Competition law, the budget declared that the government will keep all the six recommendations of the Furman Review for making the competition available in the digital markets of the country.
Our government has established a cross-regulator taskforce to see the possible regulation of digital platforms. The announcement of inventing a digital market by the Department for Digital, Culture, Media, and Sport (DCMS). The six recommendations are:
- The government must set and resource a pro-active competition in digital markets with new tools for digital competition.
- Improving a code of competitive conduct for maintaining competitors who have the strategic market status.
- Higher mobility of data and system having open standards.
- Advancement of data openness.
- For taking technological developments into the account and updating the economy of the new technology.
Rest recommendations contain:
- More habitual actions by the UK competition and markets authority (CMA) to challenge the acquisitions of technology;
- Also to update CMA’s antitrust enforcements, observing the algorithms and the artificial intelligence against the anti-competitive activity, try to manage a market study into digital advertising, and supporting closer cooperation among the foreign authorities and also the CMA.
The task force is concerned with 3 areas:
- The scope for advertising the competition and innovation– the test which is used for identification of firms and the online works must be considered to be in the scope of a digital market;
- The range of remedies there under the new approach– also includes the circumstances, aim to be applied;
- The options for designing procedure– a new way to put into effect must be made.
Impact of digital platforms
Digital platforms have created a great impact everywhere, in the business, economy, our lives, and also in society:
- For the customers, one each and every information is available on the digital platforms and you can know everything just by a single click. This platform has also made us know about online orders, shopping and delivery services. It also helps us to communicate with our friends and relatives whenever we want to. For business purposes, these digital mediums created new markets having many audiences who provide revenue streams.
- Tech nations rightly mentioned that in 2017, the digital sector contributed around 184 billion value which got added to the UK economy. This digital platform is hugely increasing and is also getting recognized.
In many markets under the digital platform, the Furman Review has identified evidence of concentration. The mobile operating systems, online search and social media networks have made over 90% of market profits. There are also many companies which are individually having a stronger market value.
- Google– It has the supply of online search around 90% over a decade.
- Facebook– Facebook is used by over 43 million people in the UK.
By enhancing their position in the market, they can exclude their competitors and they can also influence their users who rely on them. For being the winner in the field or achieve the highest record, there will be huge competition with respect to the high-quality services and innovative ways but if competitive pressure won’t be there then that would lead to higher price and no innovative products in the market and hence, the quality of the product will also decrease.
Ensuring competition, innovation and coherence
These all challenges review that the tools used for competition are not sufficient enough and we need to have more competition tools for more development in the digital markets. We need to promote an approach that will be speedy in nature and should also be flexible and not strict for ensuring and maintaining the digital markets. This approach which needs to be adopted is called a forward-looking approach. This approach brings more clarity to the users and reduces competitors. This provides the users with the confidence to invest more and also helps them to know what they can and cannot do.
A new pro-competition approach is going to be made for growth in many countries around the world. Countries like Australia, Europe, and the UK have already established this approach. In the UK, the Furman Review proposed this approach consisting of a code of conduct for certain platforms.
Recommendations of the digital competition expert panel (The Furman review)
In 2018, the Secretary of State and also the Chancellor of the Exchequer for energy and Industrial strategy appointed professor Jason Furman to the panel for consideration of the opportunities in the digital economy. This panel’s report came in March 2019 and the government accepted the recommendations from March 2020. This report leads down that the competition in the digital medium will proceed through the new DMU (Digital Markets Unit) along with powers and duties for pro-competitive rules and regulations.
The review which was recommended by the digital markets unit (DMU) lead down 3 functions:
- For the creation of a digital platform and work with the industry;
- To enforce personal data mobility. The meaning of personal data mobility is by allowing the consumers greater control to their personal data; and
- For promotion competition, the use of data can be made.
The CMA’s online platforms and digital advertising market study
The CMA produced and also published the report in July 2020. This mentioned that both Google and Facebook would meet the criteria for SMS (Strategic Market Status). Both this Facebook and Google promoted competition.
Scope of pro-competition regime
The Furman Review observed and identified one major challenge while establishing a pro-competition regime which was defining the scope of activities covered. The taskforce tried various approaches for defining the scope of a new pro-competition regime. Even though Furman’s review did not directly and accurately identify the scope but it suggested a solution. The main suggestions are as follows:
- The regime must be going through a scope in the primary legislation which is based on economic features.
- In every 3 to 5 years the regime would make a statutory review of the markets which are recognized.
The approach of the taskforce
By the end of 2020, the task force will have delivered its final findings to the government. The primary focus of the task force will be to identify the fixes which need to be applied to the system, the institutions that would be affected by these new steps along with the powers that would be required to enforce these fixes. Further research on individual platforms and markets would be necessary before enforcing these for real.
This task force will be highly influenced by the current government and their proposals for pro-competitive intercession in the digital markets which are being enforced. It also takes into consideration the views from a wider market and analyses them. Apart from this, it would also consider expert advice from many organizations in this domain.
It would also take suggestions from similar organizations existing in other countries and would try to gain some insight into the challenges they face, their knowledge of dealing with problems and their potential solutions. This would shed some light on the global nature of the digital platforms and would also convey the willingness of coordinated global organizations towards this purpose.
This taskforce will basically work alongside the government. However, it will retain the independent decision-making power and these decisions would not be influenced by the government or any other organization. The final advice regarding the digital platforms will be conveyed from the side of this special task force. It is therefore important on the side of the task force to see the bigger picture and arrive at a decision keeping in mind the best interests of the digital market.
The basis of the task force’s advice will be derived majorly from its understanding of the current and future scenarios of the digital market. Data will be collected and analyzed to estimate the effectiveness of its approach and solution in the long run. The study of the market will gather data on the challenges in the domain of social media and digital marketing. The analysis of these studies will reveal potential solutions that will help resolve the issues that come forward. However, the Taskforce wouldn’t focus on a detailed analysis across the whole digital market, rather, it would focus on the markets where the major issues found in the studies are found in abundance.
On March 11, the UK government in the 2020 budget announced that it will adopt the recommendations of the Furman Reports. The government established a Digital Markets Taskforce for building up the Furman Report’s Finding. The task force is headed by the senior CMA.
The main area of the taskforce
- Potential creations to the digital platforms with the SMS (Strategic Market Status). The Furman Review clearly clarified that the SMS designation must be kept reserved to the leading power companies but they are still not clear about how wide the net will be. The taskforce gives advice on whether promoting competition is justified in platforms.
- It provides advice on the code of conduct to promote competitions in the markets.
- International cooperation must be valuable and how can it achieve the practice.
- Deals with the interaction with the pre-existing regulations which involves the growth of the economy, innovations, data protection and also privacy.
- Remedies available for the data that is accessed along with the social media markets. These remedies must be kept in the code of conduct along with specific powers related to it.
The new taskforce has to consider the practical actions of the pro-competitive measures which are set by the Furman Report. Also for having business in the digital market, the balance needs to be maintained between the competition and innovation and also avoid the pressure and burden on the business. This taskforce is reported to the government in a maximum of 6 months while making final decisions with regard to the pro-competitive regime, the government will draw as per the advice of the taskforce. The new 2020 budget can improve a lot for the future generation. This change had made a great impact in various countries.
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