GovWire

The digital markets competition regime

From January 2025, new responsibilities for the CMA came into force under the Digital Markets, Competition and Consumers Act 2024.

The new digital markets competition regime enables the CMA to promote competition in fast-moving digital markets, while protecting UK consumers and businesses from unfair or harmful practices by the very largest technology firms.

The regime will unlock opportunities for more innovation and economic growth across the UK tech sector, benefitting companies of all shapes and sizes along with the investors who back them. It will also help people and businesses across the UK, who rely on access to critical digital markets, to get a fair deal. ???

Will Hayter on the UKs new digital markets competition regime

On 14 January 2025, the CMA launched the first investigation under the regime, focused on Googles activities in search and search advertising.

On 22 January 2024, the CMA announced that it would also investigate Apple and Googles position regarding their mobile ecosystems, which includes operating systems, app stores and browsers that operate on mobile devices.

More information is available on each of the investigation pages:

• SMS investigation into Google in relation to general search and search advertising

• SMS investigation into Apples mobile ecosystem
• SMS investigation into Googles mobile ecosystem

Benefits of the regime for the UK

The regime provides a unique opportunity to encourage the benefits of investment and innovation from the largest digital firms, while ensuring a level playing-field for the many start-ups and scale-ups across the UK tech sector. The multitude of UK businesses and consumers who depend on the largest firms for critical products and services will also benefit from more innovation, more choice and more competitive prices.??

• opportunities to harness the benefits of continued investment and innovation by the very largest firms
• unlocking expanded opportunities for investment and innovation by creating a level playing field for start-ups and scale-ups (many UK-based) to succeed
• strengthened opportunities for UK consumers and business customers, those who rely on key platform services, to benefit from greater choice, more innovation and lower prices

People can:

• make informed choices, with defaults and choice architecture aiding decision-making
• use the products and services that best meet their needs, regardless of what other products and services they use and who they are provided by
• easily switch providers, without losing access to their data and content
• be protected from exploitation and unfair or misleading practices

To ensure that businesses:

• that rely on Strategic Market Status (SMS) firms do not face exploitation or anti-competitive behaviour by those firms
• have a fair chance to compete with SMS firms, including through appropriate access to data and functionality

Driving economic growth and improved productivity by:

• harnessing the benefits of continued investment and innovation by the very largest firms
• expanding opportunities for investment and innovation by creating a level playing field for start-ups and scale-ups (many UK-based) to succeed

Criteria for Strategic Market Status

The heart of the regime is proportionality. It is designed to apply only to the very largest firms. If certain conditions are met, these firms can be designated with Strategic Market Status (SMS) in relation to a particular digital activity.

Will Hayter on Strategic Market Status

In the first investigation under the regime, the CMA will consider whether Google, which accounts for more than 90% of all general search queries in the UK, has SMS in the provision of search and search advertising services.

The second area of focus for the CMA relates to two further investigations one into Apple and another into Google to assess whether these firms have SMS in their respective mobile ecosystems which include the operating systems, app stores and browsers that operate on mobile devices.

The CMA will carry out investigations within a 9 month statutory timeframe to consider whether to designate a firm with SMS.

To assess whether the conditions for an SMS designation are met, the CMA will carry out evidence-based investigations, consulting and engaging with a wide range of stakeholders.

The conditions are:

• 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

The CMA must carry out a forward-looking, five-year assessment to decide whether a firm has substantial and entrenched market power in a particular digital activity. To make sure the regime keeps up with developments in fast-moving digital markets, SMS designations are time-bound for review every 5 years.

A firm has a position of strategic significance if it has at least 1 of the following:

• significant size or scale in the digital activity
• a significant number of other firms use the digital activity to carry out businessit can extend its market power to a range of other activities
• it can substantially influence how other firms behave, in respect of the digital activity or otherwise

Stages of an SMS investigation

An SMS investigation will usually last 9 months. The stages are:

• launch of the designation investigation
• consultation period
• proposed decision
• consultation period
• final decision

At least 9 months before the end of the five-year designation period, the CMA must open a new SMS investigation to re-assess the firms status.

What happens as a result of an investigation

If the CMA designates a firm with SMS, it will have 2 key tools: Conduct Requirements and Pro-Competition Interventions.

Through Conduct Requirements, the CMA will be able to guide the behaviour of SMS firms, tackling conduct that could undermine fair competition, or exploit people and businesses.

Through Pro-Competition Interventions, the CMA will

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