Grappling with digital markets in new bill – MP

• North West Norfolk MP James Wild’s June 9 column:

Every day people rely on Facebook, eBay, Amazon, Google, Apple or other online services. Technology permeates all aspect of our lives and creates huge benefits for consumers and makes a major economic contribution.

It is one of the UK’s strengths – we are the only country outside the US and China to have a tech sector with companies valued at over £1 trillion. Given the scale and importance of these digital markets it is also important that the regulatory system keeps pace.

In Parliament we are grappling with that challenge. The new Digital Markets, Competition, and Consumers Bill aims to do that by reforming digital market regulation, the competition regime, and consumer protection. But we must always be mindful that intervention in markets come at a cost and firms shouldn’t be penalised for being successful.

Markets works based on rules and digital markets have features – including the importance of data – that creates a tendency towards a few large players. It is not necessarily the case that having a small number of companies with large market power is in itself a bad thing—it can represent the reward for innovation and investment.

However, when the Competition and Markets Authority looked at the online advertising market it found Facebook and Google’s position meant consumers and businesses had unfavourable terms imposed on them.

The Bill will give the Competition and Markets Authority powers to apply conditions on how some firms operate to ensure fair dealing, choice, and trust —for example, allowing people to switch easily between services.

The legislation will also make it easier for the regulator to act where companies breach consumer protection laws. Which? has pointed out that a lack of powers meant it took nearly six years to get an online secondary ticketing market to change its practices.

Once this Bill has passed the CMA will be able to investigate suspected breaches and issue enforcement notices and fines, as happens in other countries.

Another area covered is fake reviews which harm consumers and businesses by encouraging people to buy poor quality products or put them off visiting a restaurant or other venue. This is a particular concern among local businesses and our vibrant tourism and hospitality sector. New rules will help tackle these.

However, this new regime must be proportionate. As a member of the new Regulatory Reform Group of MPs and Peers, I am concerned about the accountability of regulators and where systematic underperformance has led to higher prices and lower levels of innovation and competition. Given the significant power regulators wield, they must be more accountable for decisions affecting our lives.

Regulation can seem a slightly dry topic. But where competition is not effective, proportionate intervention can help deliver better outcomes for consumers.

We only have to look at the failings of the energy regulator on pre-payment meters and disconnections or firms going bust, to see the importance of acting swiftly against breaches of rules, strengthening competition, and cracking down on rip offs. AI poses other challenges and is a topic I will return to.