The logos of Google, Facebook, Instagram, Twitter, Snapchat and TikTok are displayed on a computer screen.
Denis Charlet | AFP via Getty Images
The UK’s race watchdog doesn’t just have GIFs on its mind.
The Competition and Markets Authority’s investigation into Facebook’s acquisition of Giphy is the regulator’s latest move as it takes on a more prominent role in regulating Big Tech.
In April, the authority created a new division within its ranks, the Digital Markets Unit, set up to devote more resources to police competition in the UK’s digital market.
One of the first ports of call is the creation of new codes of conduct for major players such as Facebook, Google and Amazon.
The CMA has appeared in many headlines over the past year. In recent weeks, it put the kibosh on the merger between Seedrs and Crowdcube, two of the UK’s largest crowdfunding platforms.
It examined Amazon’s investment in Deliveroo and held the funding for months to assess its impact on food delivery in the UK, eventually approving the deal.
The new digital unit seems like a logical step for the watchdog as it prepares to take a tougher approach to Big Tech.
Vijay Raghavan, a senior analyst at research firm Forrester, said the CMA’s heightened actions against major technology fit a global theme that has developed in recent years, particularly in Europe and the US.
“The way the CMA has worked and some of the decisions they’ve made regarding the Seedrs deal and the scrutiny the Deliveroo deal got, I think the theme you can see is you want a level playing field offer., ‘Raghavan said.
The US and the EU have been the two main players investigating Big Tech companies in recent years, especially with the EU’s bumper fines and sanctions against Apple and Google.
“It certainly seems that the reach and power these technology companies have at the moment is getting more attention. The amount of data they collect on all of us needs to be better understood,” Raghavan said. “Here in the United States, there was a lot of attention in the elections to the big tech companies and stuff.”
Brexit has added an important dimension to the CMA’s modus operandi moving forward and how it operates beyond the remit of Brussels.
In late March, the CMA published its annual plan recognizing the landscape it faces, saying the authority is committed to “playing a greater role internationally to promote competition and protect consumers.”
The annual plan follows a report submitted to the UK government in November, which noted that competition in the country’s economy has declined over the past 20 years.
It is amid this backdrop – coupled with the economic challenges that Covid-19 has created – that the CMA is assuming a greater role in overseeing global technology.
Stephen Whitfield, a competitor at law firm Travers Smith, said this could go two ways in the UK and the EU, where tech companies now have to consider two tough watchdogs when trying to get a deal on the line.
“Brexit is a factor in this. I think it might be an opportunity for a UK regulator. In cases that might otherwise have been enforced at European level, (a case) can now be prosecuted at UK level. in Europe, “he told The Washington City Times.
This growing wave of investigations against tech companies has been seen through the various investigations launched by the European Commission. Europe wants to take even tighter control with the forthcoming Digital Markets Act.
Meanwhile, the US has started to bend against Big Tech more often, as seen recently at the series of congressional hearings where bosses from Facebook, Google, Amazon and others were grilled on competition and misinformation.
However, the Digital Markets Act has not yet been passed, nor have US lawmakers passed new federal laws targeting the industry.
The tide may turn, but how many tooth adjusters will expose on both sides of the Atlantic, including the UK, remains to be seen.
“I think one advantage that the CMA has, which has less to do with teeth and more to do with reach, is that it has a fairly wide or broad jurisdiction threshold, so in a sense it can bring a lot of mergers within reach. regulators would have difficulty given the way their jurisdictional thresholds work, “Whitfield said.
Over the past decade, competition regulators have missed a selection of major consolidating deals in Big Tech that would have major repercussions on the market.
Whitfield points to Facebook’s acquisition of Instagram in 2012. The deal was an example of a much larger company buying a smaller company, but no one expected how influential that smaller company would become under the purview of the new owner.
In late 2020, the FTC and some states in the US will have their investigation into the Facebook Instagram deal about eight years after it closed.
Whitfield said merger control authorities are more aware than ever of small, seemingly harmless acquisitions, but they are also in the difficult position of trying to predict which path a deal might take.
The CMA recently scrutinized Uber’s acquisition of British company Autocab before approving the deal. This may also be at the heart of the Giphy probe, but as more acquisitions and investments get on track, regulators will have a heavier workload in researching and predicting the effect they will have on competition.
“The further you try to look into the future and the more you try to look at potential competition, the more difficult it is in some ways to prove those theories,” Whitfield said.