A new UK law passed last week could empower regulators to directly fine Big Tech businesses without needing court approval.
Last week, the UK government passed the Digital Markets, Competition and Consumer Bill (DMCC), which will enable the UK’s Competition and Markets Authority (CMA) to fine tech businesses substantial sums if they don’t abide by new regulations intended to encourage competition in digital markets.
The law will empower the CMA to determine if a company has violated regulations, mandate compliance, and impose fines without resorting to the court system. The CMA can penalise companies with fines of up to 10 percent of their global revenue for breaching the new rules.
The UK parliament described the bill:
The Digital Markets, Competition and Consumers Bill will create a regime to empower the Competition and Markets Authority (CMA) to regulate and increase competition in digital markets. The bill also updates powers to enforce competition law and resolve consumer disputes, and protects consumers from unfair commercial, subscription, prepayment and saving schemes.”
Also falling under the DMCC’s remit is consumer protection, which it intends to address by mandating certain companies to report mergers to the CMA, banning fake reviews, regulating secondary ticket sales, increasing transparency in subscription contracts, and eliminating hidden fees.
Organisations with Strategic Market Status (SMS) will have to comply with the DMCC. SMS businesses are required to have a global revenue exceeding £25 billion or UK revenue surpassing £1 billion and are characterised by “substantial and entrenched market power” and hold a “position of strategic significance”.
The DMCC is similar to the EU’s Digital Markets Act (DMA), which came into effect last year and also enforced requirements for “digital gatekeepers” — such as Meta, Google, Amazon and Apple — to comply with practices that encouraged market competition. However, the DMCC offers more specific requirements that each SMS organisation will have to address than the more blanket regulations of the DMA.
Microsoft Under The Legal Microscope
Regulators are currently scrutinising Microsoft for several reasons.
The troika of the UK’s CMA, EU’s European Commission, and the US’s Federal Trade Commission (FTC) are all examining Microsoft’s relationship with OpenAI, if not having announced formal investigations already.
Microsoft invested roughly $13 billion in OpenAI over five years, but these probes followed November’s OpenAI saga, in which its CEO, Sam Altman, was ousted by its board before being reinstated just four days later following intense pressure from both employees and investors.
Over 700 of OpenAI’s 770 workers said they would resign unless Altman were allowed to return, while Microsoft, as OpenAI’s largest investor, exerted soft pressure on OpenAI’s board.
Notably, Microsoft released a statement two days following Altman’s sacking that the Seattle-based tech giant had hired both Altman and his OpenAI Cofounder Greg Brockman to oversee a new AI research team. In their open letter to the board, the 700-strong group of OpenAI employees said that Microsoft had promised them jobs if they followed through on their threat of resigning.
In addition to Microsoft securing the nonvoting board position following Altman’s return, Microsoft CEO Satya Nadella was vocal about the need to improve OpenAI’s governance.
Microsoft is also set to be issued antitrust charges by the European Commission.
According to Financial Times sources, the charges related to the vendor’s bundling of Teams and Office. The European Commission launched a formal investigation into Microsoft bundling the products after a 2020 complaint by collaboration competitor Slack.
Last year, Microsoft unbundled the platforms in Europe before the enterprise tech juggernaut took the practice worldwide, referencing “feedback” from the European Commission.
Many suspected that Microsoft aimed to avoid the antitrust ruling. However, EU officials still appear to have concerns that the organisation has not gone far enough to enable fairness in the market.
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