Upping the Ante
The UK's Tech regulator just made it's first move as Google designated with Strategic Market Status
A day of ‘firsts’ today with the announcement by the Competitions and Markets Authority (CMA) that Google had been designated with Strategic Market Status “in general search and search advertising services.”
This was the first time a UK digital platform regulator has ever exercised the powers granted to it by the passing of the DMCC law last summer. This created the legal framework in place to regulate a Big Tech platform under sovereign UK law.
This was the first combination of Company+Market to be assigned Strategic Market Status (SMS) which the CMA defines as “substantial and entrenched market power and a position of strategic significance in a digital activity”.
Google+Search seems like a pretty good place to start - a 90% market share and recent evidence from both the US and EU markets of dominance and market harms. Still, someone has to go first and it makes sense to start with a winning hand.
Google also becomes the first company to have to respond to such a designation, in which it treads a careful line between being supportive of fair markets and benefits to consumers and businesses while also warning of the likely side effects of putting regulatory sand in the gears of Google’s product development.
Least discussed but to me the most important first is that this launches the first legally defined market for an ex-ante regulator to operate. Ex-ante is a fancy term for ‘in advance’ or more accurately regulatory intervention at the point that market harms start to develop, rather than ex-post which waits for complaints and so always acts after the harms have been done.
That brings digital platform development in line with OFCOM and other UK regulators, plus the EU Digital Markets regulators and the Australian ACCC. This contrasts with the Department of Justice which just showed in the Google Search case on the US of the dangers of ending up in court two years after the case was set out - the world moves on.
Ex-ante regulators are the only answer to dynamic markets and also to the conduct of those digital firms who want to move fast and break things and hope to keep moving so fast the lawmakers don’t catch up. Excellent example of this covered by Sam Altman in his blog about why the rollout of Sora 2 broke fundamental IP and copyright laws but we should expect that and they’ll take a look at it in time.
They are also the only realistic answer to the sheer complexity of digital markets. Only those with deep subject knowledge can clearly judge where harms are developing amongst the noise from publishers, platforms, businesses and even governments alike. A full time qualified force is being built up at CMA towers.
So - a big step for sovereign digital regulation after what feels like a hundred years but is only about a decade of debate about how this might happen. Good to see, and let’s hope that this case demonstrates the new team can promote fair competition and unlock domestic innovation while also recognising the supply chain impacts that shaking up a Google can have.
Now that would be a first worth celebrating.
Just as the CMA can now step in before harm is done under these ex-ante powers, Europe’s Unified Patent Court has taken a similar proactive step that doesn't suit Big Tech.
It just ordered Amazon to stop asking a UK court for a temporary licence in its dispute with patent owner InterDigital.
That license would have allowed Amazon to carry on BAU until the dispute was resolved, potentially years down the track.
Pre-Brexit, it was a commonly-used tactic.
Besides this being a first-of-its-kind decision, what's also unusual is for one court system (in this case, the EU-wide Unified Patent Court) to tell a party not to pursue a case in another country’s court.