We don’t need State meddling in the digital marketplace

Earlier this month, the Government launched a new regulator called the Digital Markets Unit, a quango designed to introduce new checks and balances to the wide-ranging activities of tech giants like Facebook and Google. It is the Government’s answer to calls from around the world to ‘rein in’ big tech. The body’s launch had been trailed for several months, but it’s still unclear exactly what its parameters or purpose will be.

Some of the rhetoric around the DMU has been positive. The Government’s press release describes it as ‘pro-competition’, which is encouraging. The spin around the DMU launch also places an emphasis on the need to ‘spur development of digital services and lower prices for consumers’.

That all sounds very positive – if it turns out to be true. A consumer-focused approach which seeks more competition, not less, would indeed be a boon for the technology industry and would be a good thing for all of us. Only time will tell whether the Government bears out this consumer-centric rhetoric in the policy of the DMU, or whether it slips into that trap to which state bodies are so often vulnerable, of erring on the side of gratuitous intervention in the market.

There does appear to be some degree of appetite within government for a more intrusive regime which would be highly damaging, both to the companies involved (and therefore the UK economy as a whole) and everyday users of online services like you and I. Health Secretary Matt Hancock, for instance,applauded the Australian government for its pioneering new law forcing online platforms like Facebook and Google to pay for news content.

That move was incredibly damaging in Australia and repeating it in Britain would be a catastrophic mistake. Never before has anyone had to pay a content producer in order to a host a link on their platform. In fact, even a rudimentary understanding of how the online marketplace works makes it clear that the dynamic is the other way around – people fork out huge sums for digital advertising packages, meaning they pay in order to put their links on more people’s screens.

The Australian government’s decision, then, to intervene arbitrarily in the market and force Facebook and Google to pay news outlets in order host their content did nothing for the user or the free market. All it achieved was moving some money from Mark Zuckerberg’s pocket into Rupert Murdoch’s. Matt Hancock’s strident approval of that policy – for which no one, not even the Australian government which implemented it, seems able to provide a coherent defence – is a bad sign.

Factions and frontiers are beginning to form within the Government and the Conservative Party more broadly on this. Even within Cabinet, dividing lines are starting to emerge between figures like Hancock, who seem to favour more intervention from the Government, and others like Business Secretary Kwasi Kwarteng and  Digital, Culture, Media and Sport secretary Oliver Dowden who – so far at least – appear to be on the side of the free market and of the belief that the DMU should aid competition, not seek to restructure it from the ground up.

Only time will tell which side wins out in the end. The DMU could yet be a hero or a villain. We can only hope that the Government will keep the consumer front and centre in their minds when crafting their technology policy.

Originally published here.

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