The UK’s Competition and Markets Authority (CMA) has introduced a new bill that would allow it to impose multi-million-dollar fines on major tech companies like Apple for breaking its rules.
The multifaceted bill is designed to promote competition and protect consumers by giving the CMA the authority to address “excessive dominance” by technology companies, according to a government press release.
Tech companies deemed to have “strategic market status” in key digital services will have to abide by its rules or the agency’s Digital Markets Unit (DMU) could slap significant fines on them.
The CMA has not named which companies with “strategic market status” it will be monitoring, but a threshold will apply, meaning only companies with global turnover above £25bn, or UK turnover above £1bn will be in scope, so Apple, Google and Amazon are likely to fall under this definition.
The government said the DMU could require such companies to be more transparent about how their app stores and review systems work, and the agency would have powers to open up a specific marketplace depending on the situation. For example, Apple could be told to allow iPhone and iPad users to download apps from alternative app stores, or if it’s a search engine like Google, they could be forced to open up their data to rivals.
The legislation will also target “subscription traps”, in which companies make it difficult for consumers to cancel a contract. Under the new rules, companies will need to remind consumers when a free trial or low-cost introductory offer ends and ensure that a contract can be canceled in a cost-effective and easy way.
If companies do not comply with the rules set for them, the DMU will have the power to fine them up to 10% of their global turnover and make senior managers personally responsible for ensuring that their company complies with DMU requests. As a ballpark figure, Apple made $283 billion in revenue by 2022, so any hypothetical fine could be worth as much as $28.3 billion.
“From abuse of power by tech giants to fake reviews, scams and scams like getting caught in a subscription trap, consumers deserve better,” said Business and Trade Minister Kevin Hollinrake. “The new laws we are introducing today will allow the CMA to directly enforce consumer law, strengthen competition in digital marketplaces, and ensure that people across the country keep their hard-earned money.”
In preparation since 2021, the bill will be heard in parliament on Tuesday and the new measures will take effect after parliamentary approval, subject to secondary legislation and the publication of guidance.
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