The Digital Markets, Competition and Consumer Bill introduced by the Competition and Markets Authority (CMA) is a piece of legislation proposed by the UK government in December 2020. The bill aims to introduce new measures to regulate the behavior of tech companies and promote competition in digital markets, as well as to protect consumers’ interests.

The announcement of the bill came as the CMA decided to prohibit a $69bn merger between Microsoft and Activision Blizzard. Major gaming competitor Sony objected to the merger, saying Microsoft could harm the Call of Duty franchise.

But the deal was later halted by the CMA, which said the prohibition of the merger would be an effective and proportionate remedy to address the substantial lessening of competition (SLC) in the market for cloud gaming services in the UK and its resulting adverse effects.

“We’ve prevented Microsoft from purchasing Activision over concerns the deal would damage competition in the Cloud Gaming market, leading to less innovation and choice for UK gamers,” the CMA said.

The CMA identified the following as harmful to competition:

• The fact that people value being on the same network as each other makes digital markets prone to ‘winner-takes-most’ tipping points where one or 2 platforms come to dominate.
• The data gathered by large players gives them a powerful advantage over competitors – including in other related markets – meaning that market power can quickly spill over from one market to the next.
• The unprecedented scale, scope and development speed of digital markets means that, when competition problems do arise, harms can spread quickly across the economy and become locked in.

Microsoft president Brad Smith voiced his view the move was bad for Britain, saying the message the CMA sent “will discourage innovation and investment in the UK.”

“The new regime proposed in the bill bears many of the hallmarks of the FCA supervisory regime for financial institutions.”

Eversheds Sutherland

The bill is currently going through the parliamentary process, and it is expected to be subject to amendments and changes before it becomes law.

“This is a step-change in the UK regulatory landscape which provides for a proactive and interventionist regulatory regime – similar to the regulation of financial institutions and utilities – for some of the major Big Tech companies,” law firm Eversheds Sutherland said in an analysis, calling this a ‘watershed moment’, adding “the new regime proposed in the bill bears many of the hallmarks of the FCA supervisory regime for financial institutions.”

The main provisions of the bill include:

1. Creating a new regulatory framework for “digital markets” with significant market power, to prevent abuse of their dominance and to promote competition.
2. Giving the Competition and Markets Authority (CMA) new powers to enforce the new regulations and to fine companies that violate them.
3. Introducing new rules to improve the transparency of online advertising and prevent the use of personal data without consent.
4. Strengthening consumer protections, including new powers for the CMA to take action against misleading or harmful online content.