Big tech firms – like Google, Apple and Amazon – will face heavy fines for rule-breaking under the new digital consumer bill
New legislation launched last month – the Digital Markets, Competition and Consumers Bill – came a step closer to becoming law after approval in today’s parliamentary session.
MPs from across the parties backed proposals to give the UK competition watchdog stronger powers to investigate and impose penalties on tech companies that abuse their dominant position in the market. However, there were criticisms the reforms are long overdue and falling short in terms of allowing consumers to be paid damages when rules have been broken.
The Competition and Markets Authority set up the Digital Markets Unit (DMU) to do the job of regulating big tech companies. It will have new powers aimed at boosting competition in digital markets currently dominated by a small number of big tech firms. This, it says, will ensure people are treated fairly through lower prices and more choice.
Sarah Cardell, Chief Executive of the Competition and Markets Authority, said:
‘The new fining powers will provide an important deterrent to businesses seeking to take advantage of people while also ensuring fair dealing businesses can thrive.’
Current consumer lawsuits taking action on big tech firms
Amazon, Apple and Google are the subject of legal claims for allegedly abusing their dominant position and bumping up prices at the expense of UK consumers. Amazon faces a £900m consumer legal claim after evidence claims to show it is abusing its dominant market position by not always offering customers the best deals.
Apple faces a £1.5 billion legal claim for exploiting its ‘captive market’. The £1.5 billion legal claim accuses Apple of overcharging 20 million UK customers in its popular App Store. Google faces trial for overcharging 19.5 million UK customers in its Play Store. All claims, if successful, seek to compensate affected customers. Sign up to Consumer Voice to stay informed about these claims and find out whether you’re eligible to claim.
Tech companies to face hefty fines
The new law will give the UK competition regulator the power to enforce consumer law rather than have litigants go through lengthy court proceedings. It will be able to impose penalties of up to 10% of global turnover if companies don’t abide by new rules.
Big tech companies may be told to give customers more flexibility when buying products online and to stop creating technical barriers that block people from using products on different devices. They may be told to open up their data to rival search engines or increase the transparency of how their app store or marketplace review systems work.
The government claims that the DMU’s stronger role in tackling the causes of competition issues in digital markets will open up new paths for start-ups or smaller companies that have struggled to compete with the big players in these markets.
Business and Trade Minister, Kevin Hollinrake, said:
‘The government’s new digital regime will give the DMU powers to ensure that businesses and consumers are not unfairly disadvantaged by the biggest players, allowing them to access dynamic and thriving digital markets that will ultimately support our economy to grow.’
Action on fake reviews and subscription traps
The new rules will also ban companies from facilitating fake reviews without checking they are genuine. It will also make it easier for consumers to exit subscription traps when a free trial or introductory offer comes to an end. Subscription traps are estimated to cost consumers £1.6 billion a year.
The bill has received support from consumer advocacy groups. Rocio Concha, Which? Director of Policy and Advocacy, said:
‘The bill is a pivotal step to make markets in the UK work better for consumers, businesses and support economic growth. Whether it’s fake reviews by dishonest businesses or people getting trapped in unwanted and costly subscriptions, our consumer protections are overdue for an upgrade.’
Google faces a £920m consumer claim for excessive Play Store charges. Sign up for updates if you bought apps on your android since 1 October 2015.
Amazon and Apple accused of striking secret deal to increase the cost of Apple products costing UK consumers £500 million. Sign up for updates.
Apple faces allegations of excessive App Store charges of £1.5bn. Sign up to stay updated if you bought apps on your iPhone or iPad since 1 October 2015.