ICLE-Entrepreneurs Network Paper Highlights Concerns About UK Digital Markets Unit

PORTLAND, Ore. (June 3, 2021) — The United Kingdom’s proposed Digital Markets Unit (DMU), nominally intended as a de facto regulator of the largest tech companies, is likely to grow into a “super regulator” whose remit could quickly encompass more and more of the economy, a new briefing paper jointly published by The Entrepreneurs Network and the International Center for Law & Economics (ICLE) finds.

Co-authored by The Entrepreneurs Network’s Aria Babu and Sam Dumitriu and ICLE Director of Competition Policy Sam Bowman, the paper examines the powers the U.K. Digital Markets Taskforce proposes to give to the new DMU, as well as the problems of putting the unit’s primary duties into operation, given its vague objectives and different constituencies.

“In its current proposed form, the DMU could influence the activities of companies beyond those found to have market power,” the authors write. “This could create major barriers to inter-platform competition — a key part of competition in platform markets, as platforms vie with each other to keep users within their ecosystem and attract new ones. And, if it makes it harder for smaller firms to be acquired, it could reduce both the founding of, and investment in startups in the UK.”

The paper concludes with a set of recommendations to ensure the DMU fulfills its aims to promote competition and innovation in UK digital markets, including: imposing a clear consumer welfare goal; removing requirements that the DMU approve product design changes; limiting the unit’s scope of powers; allowing full appeals to the Competition Appeals Tribunals; and including sunset clauses in “strategic market status” designations.

Media interested in interviewing or booking Sam Bowman to discuss the proposed Digital Markets Unit may reach him at [email protected] or (971) 312-8502.