Digital Markets, Competition and Consumers Bill

Second Reading

That the Bill be now read a second time.

My Lords, I start my opening speech with a reference to the importance of digital. In recent decades, digital technologies have brought untold benefits to people around the world. From connecting us with loved ones in faraway places to streaming our favourite album or TV series in an instant, our lives are enriched by the services that these technologies enable. In the UK, digital technologies were fundamental to our collective response to the Covid-19 pandemic, helping businesses to continue operating and helping friends and family to stay in touch in challenging times for us all.

The digital revolution has also had transformative and hugely beneficial effects on our economy. The UK has the largest tech ecosystem in Europe. Last year, our start-ups and scale-ups raised more investment than France and Germany combined. We have more tech unicorns than any other country in Europe with eight cities having at least two unicorns, including Edinburgh, Nottingham and Leeds.

The strengths of our vibrant digital sector are numerous and closely interlinked. From our world-class universities and breadth of tech talent to our support for start-ups and our innovative financing sector, the UK is a global tech powerhouse. Furthermore, the UK leads the world in our approach and response to developments in digital technology. Just last month at Bletchley Park, the UK hosted the first AI Safety Summit, bringing together Governments, leading technology organisations, academia and civil society to inform action at the frontier of AI development.

I turn to the rationale for the Bill and the detail of its parts. Part 1 is on digital markets. The continued success of our tech sector relies on highly competitive digital markets. Firms with alternative market offerings and innovative ideas should have the freedom to grow and challenge powerful incumbents on a level playing field. This benefits consumers by giving them access to the best products at the lowest prices.

However, the UK’s competition framework is not set up to keep pace with developments in fast-moving digital markets. A handful of powerful tech firms now dominate strategically critical services, such as online search, app stores and digital advertising, and in effect set the rules of the game for other businesses and consumers. Jurisdictions around the world are now considering how best to address the unique competition challenges presented by digital markets, and the UK is playing a major part in these efforts.

The Digital Competition Expert Panel and the Digital Markets Taskforce—expert groups set up to examine competition issues in digital markets—both independently concluded that digital markets have specific features which may lead them to tip in favour of one particular firm. This restricts choice for consumers, growth for emerging digital companies, and the potential of small businesses that rely on large firms to reach their customer base. As such, both groups recommended the establishment of a new pro-competition regime for digital markets, which the Bill delivers.

My Lords, it is a great pleasure to follow the Minister, who has very ably set out the purposes behind this much-needed and long-awaited Bill. I hope he has not given it a fake review or indulged in any drip pricing in his opening salvo.

Our Labour colleagues in the Commons made it clear during the passage of the Bill in another place that we are fully behind the intents of the Bill. Indeed, if anything, we wish to strengthen it—a comment that will no doubt be echoed many times during today’s debate. We are at one with its direction of travel, even if we have a slightly different destination. There are, for us, issues of continuing concern, and we will focus on these when we go through its detail in Committee and on Report.

I know the Government argue that the Bill delivers on a manifesto commitment, but the truth is that it has been much longer in the making. It was as far back as 2018 when the Government set up their Digital Competition Expert Panel, and it is nearly three years since the CMA set up the Digital Markets Unit. Even with a speedy passage through your Lordships’ House in 2024, this Bill will have little impact much before 2025—a full six years after the Furman report concluded that digital markets required a new approach. Of course, we were promised the Bill in 2022, the year of extreme chaos in government and a time when Ministers were not sure if they favoured any regulation at all. All the while, we have been falling further and further behind our European neighbours and other jurisdictions and playing catch-up.

Thankfully, wiser heads have now prevailed and we have a workable, if not fully formed, piece of legislation. We should be grateful to the CMA, UKHospitality, the Chartered Trading Standards Institute, the CAB, Which? and others in the tech sector who have through their persistence helped make this happen. The sector and market are, as we know, dominated by a small number of large companies and the truth is that the lack of competition and regulation is acting as a barrier to market entry and expansion. This in turn impacts on consumers, their interests and the health of the market and our digital economy. Five years ago, the OECD reported that digital markets were exhibiting

My Lords, it is a great pleasure to be working on this Bill—a Bill that we on these Benches broadly welcome. I hope we will be able to work constructively to improve it as it moves through your Lordships’ House. It is about time, as the noble Lord, Lord Bassam, noted. The Furman report was set up five or six years ago; we have been impatient for competition law in the digital space to be reformed and for the Digital Markets Unit to be empowered—so, at last.

As the noble Lord, Lord Bassam, also noted, this is a big Bill, and it acts in a number of different ways. I fear that many of the things I say will be similar to what was said by the noble Lord; in order to maintain novelty, I will probably say them in a different order.

I will start with consumer issues. Clearly, these issues have excited correspondence from a lot of people in the outside world. We should note and thank them for the work that they have done in sending through a load of briefings. There are some important issues here, and areas that should be tightened up and improved. These include: tackling online scams, dealing with product safety issues and strengthening trading standards; taking action on primary and secondary ticketing; impeding price drip and mid-contract price rises; addressing the pernicious nature of fake reviews, as we heard from the Minister; devising a sensible way of redesigning automatic subscription rollover—there is a danger of us taking a number of other areas down with the law we have, so we must be careful of unintended consequences of that move—and delivering a range of other consumer rights, such as the possibility of collective action for consumer claims. I am sure there will be plenty of grist to this mill as we work through that part of the Bill.

Moving on from consumers, the second big challenge is the need to tip the balance of power toward content providers—and here I should declare that I have several creators in my family. As a basic principle, all content creators should be properly paid for the work they do. UK law requires payment for the commercial use of another’s copyrighted work, yet commercial use is currently being made of content by global platforms without any permission being obtained or payment being made. The dominant platforms profit from the efforts of content creators, from songwriters and artists to publishers and broadcasters, and they do not get rewarded.

My Lords, I declare my interests as chair of Peers for the Planet and a director of the associated company.

The content of this Bill is not my area of expertise— I intend to contribute on a very narrow issue—and I was therefore particularly grateful for the clarity with which the Minister described the content of the Bill and for the parsing of its contents by the two Front-Bench speakers. I thought I would be making a speech perhaps at the end of a long list of speakers, when everything had been dealt with and raised, as a little coda, but I find myself speaking first from the Back Benches.

However, I can at least assure the noble Lord, Lord Fox, that I have something to add to the list of things we might need to deal with in this Bill. It is a narrow issue, to which I will speak in a moment, but I would like to raise one other thing. In the briefings that I have received since putting my name down on the list, important points were raised by a number of charities on the measures proposed around the auto-renewal of subscription contracts and the impacts they may have on the claiming of gift aid. That is an issue I hope the Minister responding to the debate might speak about.

I will focus my contribution on Part 4 of the Bill, which relates to the protection of consumer rights, and what I believe is a missed opportunity in relation to right-to-repair provisions. I am grateful for the work of organisations which have briefed on this issue, particularly the Design Council, which has a long-standing interest in this area. Strengthening our existing right-to-repair provisions and extending them in line with international norms would have multiple benefits. It would help us to shift to a more circular economy, reduce the waste from our throwaway culture and drive down emissions.

I am sure that there is no one in the Chamber who has not had some experience of planned obsolescence—where manufacturers have deliberately designed a product to limit its lifespan. For example, they have had to throw away a perfectly good kettle and buy a new one because the on/off switch has stopped working and it is not possible to replace that part, or they have had no choice but to buy a new mobile phone because the producer has stopped providing software updates even though the handset continues to work perfectly.

My Lords, I am grateful for the opportunity to speak so early in this debate, ahead of many noble Lords who actually know what they are talking about and have specific expertise in this area. I begin by declaring my interests in the register, specifically my role as a trustee of Tate, adviser to Pixel United and broadcaster on Times Radio, which is owned by News UK.

I should say from the outset that I am a huge supporter of this Bill. As the Minister set out at the Dispatch Box, updating our competition regime—for the first time comprehensively, I think, for some 25 years —is long overdue, to take account of how the digital tech giants have changed the landscape. It is one of a number of pieces of legislation that this Government are putting through, including the Online Safety Act, the forthcoming media Bill and the data protection Bill, providing a much-needed framework for regulation of digital companies.

I shall concentrate on two issues in the Bill, but I have to say that I was extremely grateful to all the Front Benches for highlighting some of the other issues, which I was blissfully unaware of, particularly aspects such as copyright—so I may well get stuck into some other issues in Committee. But we all know what we are talking about, when we talk about giving the competition authority power: we are talking about the power to take on big tech and big platforms such as Apple and Google, which have effectively established a duopoly. They set the terms and conditions and the rents, and there is very little comeback.

It is an unusual position to be in, because as consumers we all benefit from this technology. During my speech, as it becomes duller and duller, noble Lords will whip out their iPhones and androids and have a range of apps to choose from. But this is really a Bill which puts small businesses in the place of the consumer, because small businesses are being shut out from these opportunities —and who knows what other apps noble Lords could have taken advantage of if this Bill was already law.

My Lords, I declare an interest as a television producer. I too welcome this Bill, which has been a long time coming.

Five and a half years ago, I had the honour to be a member of the Communications and Digital Committee inquiry into digital advertising in the UK. We heard how the two big tech companies, Facebook and Google, used the combination of their massive databases and near-total control of the supply, intermediary and purchase sides of the digital advertising market to take a more than 80% share. Our inquiry recommended that the CMA conduct a market study as quickly as possible into the digital ad market. Two years later, that market study confirmed the tech companies’ near-complete domination of the market. It concluded that the lack of competition harmed consumers by excessive exploitation of their data and lower quality of service to them and to advertisers.

However, the tech companies’ dominant position in the market has also had a deleterious effect on media advertisers. Publishers of news in particular have suffered from the massive reduction in advertising revenue. In the first half of 2020, while tech platforms’ ad revenue grew, digital advertising fell by 8% for national news brands, by 10.5% for online magazines and by 10% for online regional titles. It is expensive to create original news and, especially, to launch investigative journalism, which is essential to holding those in power to account.

It was therefore not surprising that the Communications and Digital Committee launched an inquiry into the future of journalism in the digital age. Journalism deserves special consideration in this Bill. I say this not just because I am a career journalist but because it plays a role of public value and importance to our society and democracy. It helps people stay informed about the world beyond their personal experience—surely a prerequisite for an active citizen in a democratic society—but it is under threat, especially the provision of local news.

I declare my interest as an adviser to DLA Piper. I too strongly support the Bill. Rather than dwell in any detail on how to improve it further—there will be plenty of time to do that in Committee—I thought it might be helpful first to attempt briefly to explain what I think is the Bill’s place in a wider policy perspective, and why I support it. Secondly, I will explain why the legislation on its own probably will not deliver the benefits that we are hoping for it. The CMA needs to do better, and so will Parliament, in scrutinising it.

On the first point, it is now widely accepted in many western democracies that competition policy has simply not been delivering the goods. I will not dwell on this for long, but concentration ratios are rising everywhere, and consumer detriment with them. The result is an erosion of public confidence in competition and consumer protection and in many regulatory bodies, including the CMA. That is only part of a much bigger picture of vulnerability to obsolescence of the tools and machinery that western Governments have been using over the past 30 years to manage capitalism and secure consent for it.

One of the problems the Bill seeks to address is that the West’s technological inventiveness, while improving economic performance, has also had the effect of challenging the legitimacy of global free enterprise. The platforms were created by global capitalism and they have improved consumer welfare dramatically. But they have also brought corrosive by-products: risks to privacy, fake news, online harm, greater cyber risk. These corrosive effects have been greatly amplified by the tendency of big platforms to monopoly. Western Governments are now struggling to adapt the machinery of regulation—in some cases radically—to cope with this. Consumer protection has also been badly neglected. Millions of people now feel vulnerable to rip-offs and no longer think that free enterprise works for them. As the noble Lord, Lord Vaizey, pointed out, small businesses —which are also consumers—have been at the wrong end of platform power a great deal recently.

My Lords, it is a pleasure to follow the noble Lord, Lord Tyrie, and I will come to his theme of accountability later in my remarks, but I am very grateful to my noble friend the Minister for setting out in his introductory speech just how successful the UK’s tech sector is to date, because it really is a huge success. I was delighted to learn that Nottingham, my home city, is one of only a small number with two unicorns—billion-dollar tech start-ups. I did not know that, so that was good to hear.

Although we have been successful so far in the tech sector in this country, we have the talent and the potential to do so much more. But we have a problem, as we have already heard, which is that our digital markets are not working properly. The financial clout and sheer computing power of the US tech giants are creating significant, often insurmountable barriers to entry for alternative providers. I want to be clear that the Bill should not be about bashing big tech. We should not penalise these businesses because of their size. Their success and innovation also create other business opportunities, providing products and services that millions of people use and love. But that does not mean they should control the way markets develop and who else gets the chance to succeed. Like most, if not all, of my noble friends on the Conservative Benches and my erstwhile noble friend Lord Tyrie, I believe that free markets drive growth when they allow for effective competition. When markets are not creating that competitive landscape on their own, Governments should step in—hence the Bill before us.

Noble Lords have already heard that the Communications and Digital Select Committee, which I am privileged to chair, has started to call for legislation to empower the CMA with a new ex ante regime under the chairmanship of my predecessor and noble friend Lord Gilbert of Panteg. Through several committee inquiries, we have heard evidence of many things— we have heard about some of them today—including: unfair dominance and control of the immensely powerful and increasingly important digital advertising market; non-negotiable fees and terms applied by Apple and Google on thousands of businesses that rely on app stores, even though the terms of trade prevent some of those businesses providing a more streamlined experience and cheaper prices for their customers; and big players using their dominance in one part of the digital market, such as search, to damage the prospects of a potential competitor in another, such as online shopping or travel bookings. In our committee, we also continue to learn more about the failing of our digital markets as more firms, previously reluctant, are now willing to speak publicly about their experiences. So, as much as I would rather that the Bill was not necessary, the case for it is clear.