The UK Digital Markets, Competition and Consumers Act
The UK equivalent of the EU Digital Markets Act came into force on 1st January 2025. It gives powers to the Competition and Markets Authority (CMA) allowing it to investigate and take action against large Internet bodies that might be abusing their position to force out competition.
The CMA will be able to designate firms as having “Strategic Market Status” (SMS) in relation to a particular digital activity. Any investigation will take place over a set 9 month time frame to identify if a body has:
- UK turnover of more than £1 billion or global turnover of more than £25 billion
- Substantial and entrenched market power in relation to the digital activity
- A position of strategic significance
Once designated as SMS the status will last for 5 years. The CMA will continue to monitor the SMS body to ensure that its behaviour is not harming competition. Mergers with a UK connection, and a value of £25 million or more, must be reported before their completion.
The stated action plan for compliance is to ‘Design and test interventions to address competition problems and any harmful effects on users’. This might include giving people the power to transfer their data easily between providers; or requiring firms to make sure different products and services work smoothly together (‘interoperability’), so businesses can more easily innovate and compete.
The CMA has already launched an investigation into the activities of Google concerning its search engine and advertising services to potentially designate it as an SMS. Google has posted a response stating that in its opinion the UK population trusts Google’s search services and that its products ‘helped to provide an estimated £118 billion in economic activity in 2023’. It also claims that ‘Google Search and Ads are also helping UK businesses to export over £20 billion worth of goods and services across the world’.
The CMA had previously (6th September 2024) issued a provisional objection to Google’s digital advertising practices. Their issues related to the way Google decides which adverts are hosted on a web search page. The advertisers bid to have their content served on a search page. This occurs through a number of intermediary matching engines including Google’s own ‘AdX’. The CMA allege that Google have given AdX a competitive advantage in this market notably:
- Providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform;
- Manipulating advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions; and
- Allowing AdX to bid first in auctions run by DFP for online advertising space, effectively giving it a ‘right of first refusal’; with rivals potentially not having any chance to submit bids.
