The Competition and Markets Authority (CMA) in the United Kingdom has proposed new legislation allowing it to levy multibillion-pound fines against major technology corporations such as Apple for breaking its regulations.
The Consumer Market Rights (CMA) will now have the right to combat what it deems to be “excessive dominance” on the part of technology companies, as stated in a news release issued by the government. This comprehensive measure is intended to foster competition and safeguard consumers.
Tech companies with “strategic market status” in large digital services must comply with the agency’s standards; if they don’t, the agency’s Digital Markets Unit (DMU) has the authority to levy significant fines against them.
The CMA has not disclosed the specific companies with “strategic market status” it intends to monitor. However, a threshold will be applied. Only businesses with a global turnover of more than £25 billion or a turnover in the United Kingdom of more than £1 billion will be in scope. As a result, companies like Apple, Google, and Amazon will likely fall within this criteria.
According to the government, the DMU may be able to demand that these companies reveal more information regarding the operation of their app stores and review processes. Depending on the circumstances, the agency may also have the authority to open up a particular market. For instance, Apple would be instructed to make it possible for users of the iPhone and iPad to download apps from alternative app stores. If the company in question was a search engine like Google, it might be compelled to make its data available to competitors.
Additionally, the legislation would target “subscription traps,” in which companies make it difficult for customers to terminate a contract. According to the new regulations, businesses must inform customers when a free trial or low-cost introductory offer ends and ensure that customers can get out of contracts easily and cost-effectively.
Imagine if companies need to adhere to the rules that have been established for them. If this occurs, the DMU can punish up to 10 percent of the firm’s total global revenue. It will hold senior managers personally liable for ensuring that their company complies with the DMU’s demands. If we use Apple’s revenue for 2022 as an example, approximately $283 billion, then any hypothetical fine could be valued up to $28.3 billion.
“Consumers deserve better,” said Business and trade minister Kevin Hollinrake. “From abuse of power by tech giants to fake reviews, scams, and rip-offs like being caught in a subscription trap,” added Hollinrake. “Fake reviews” refers to reviews made up or altered somehow. “The new laws that we deliver today will give the CMA the authority to directly enforce consumer law, which will strengthen competition in digital markets and ensure that people all across the country keep hold of their hard-earned cash,”
The bill, which has been in the works since 2021, is scheduled to be discussed in Parliament on Tuesday. After receiving approval from parliament, the new measures will go into force as soon as possible, but this is contingent on secondary legislation and the issuance of instructions.
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