Regulation enthusiasts around the world have set their sights on big tech.
In the UK, the outlet for this newfound appetite to rein in Silicon Valley is a brand new quango called the Digital Markets Unit [DMU], set to form part of the existing Competition and Markets Authority [CMA]. Specifics about the DMU’s remit are hard to come by, but the Government says it intends to foster a ‘pro-competition regime’ as it adapts the regulatory landscape to the challenges of big tech.
Oliver Dowden, the Secretary of State for Culture, Media and Sport and the minister holding the levers of power behind the DMU, is keeping his cards close to his chest. His stance remains murky, for instance, on the recent regulatory punch-up between Facebook and the Australian government. State powers down under emerged victorious after Mark Zuckerberg agreed to fork out new fees in order to host news links on Facebook.
Dowden has reportedly been chatting to his Australian counterparts – and has sent cryptic messages to the t-shirt-wearing gurus across the Atlantic (and Nick Clegg) – but has yet to come down on either side of the fence or offer any substantial hints about whether or not Britain might follow in Australia’s footsteps.
Others in Westminster appear much keener on an agenda of active hostility towards the American tech giants. Matt Hancock has already said he wants to see the UK mimic Australia’s hamstringing of social media companies by forcing them to pay news producers, calling himself a ‘great admirer’ of countries which have done so successfully.
Meanwhile, Rishi Sunak is already planning his next move. In the manner of Sacha Baron Cohen’s Dictator in a 100-metre sprint firing a gun at runners as they pull out ahead, Sunak has set his sights on the uber-successful technology industry, and wants to slow that success down by taxing it.
Not only does Sunak want to penalise tech giants for their successful business models with a new tax, he is also planning to use this year’s G7 summit in sandy Cornwall to lobby his international counterparts to do the same, with US treasury secretary Janet Yellen first in line to hear his pitch, which has the support of the Prime Minister. Companies like Amazon are already taxed for their digital services in the UK, but the chancellor views the current system as a stopgap until a global tech tax can be implemented.
This dramatic influx of punitive policies is set to do much more harm than good. Some new regulation may well be needed in this area – but there is an urgent danger that the Government will hurriedly execute a raft of headline-hungry policies which will do immeasurable damage in the longer term.
Poorly thought-out attempts to ‘level the playing field’ between old and new forms of commerce is not the area where post-Brexit Britain should be chasing a world-leading status. Instead, let’s set an example for what a modern, free economy which regulates big tech without being hostile towards it can look like. It’s not too late to keep the Digital Markets Unit’s in-house red tape production line from getting out of hand.
Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.
CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.