Data (Use and Access) Bill [HL]

Baroness Harding of Winscombe Excerpts

Committee stage
Monday 16th December 2024 Grand Committee

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend the noble Baroness, Lady Kidron, and to give full-throated support to my friend the noble Viscount, Lord Colville, on all his amendments. Given that the noble Baroness mentioned it and that another week has passed since we asked the Minister the question, will we see an AI Bill or a consultation before Santa comes or at some stage in the new year? I support all the amendments in this group and in doing so, as it is the first time I have spoken today in Committee, I declare my technology interests as set out in the register, not least as an adviser to Socially Recruited, an AI business.

I will speak particularly to my Amendment 211A. I have put down “image, likeness and personality” not because I believe that they stand as the most important rights that are being transgressed or that they are the most important rights which we should consider; I have put them down to give a specific focus on them because, right now, they are being largely cut across and ignored, so that all of our creatives find themselves with their works, but also image, likeness and personality, disappearing into these largely foundation AI models with no potential for redress.

Once parts of you such as your name, face or voice have been ingested, as the noble Lord, Lord Clement-Jones, said in the previous group, it is difficult then to have them extracted from the model. There is no sense, for example, of seeking an equitable remedy to put one back in the situation had the breach not occurred. It is almost “once in, forever in”, then works start to be created based on those factors, features and likenesses, which compete directly with the creatives. This is already particularly prevalent in the music industry.

What plans do the Government have in terms of personality rights, image and likeness? Are they content with the current situation where there is no protection for our great creatives, not least in the music industry? What does the Bill do for our creatives? I go back to the point made by the noble Baroness, Lady Kidron. How can we have all these debates on a data Bill which is silent when it comes to AI, and a product regulation Bill where AI is specifically excluded, and yet have no AI Bill on the near horizon—unless the Minister can give us some up-to-date information this afternoon? I look forward to hearing from her.

[Baroness Harding of Winscombe (Con)]

My Lords, I should first apologise for not being able to attend Second Reading or, arguably more importantly, to be in Committee last week to support the many amendments of the noble Baroness, Lady Kidron, on child protection. I read Hansard carefully and was deeply depressed to see that we were once again needing to rehearse, as she has done again today, the importance of protecting children in the digital era. It seems to be our lot that there is a group of us who keep coming back. We play the merry-go-round and sit in different places; it is a privilege to sit next to the noble Baroness, Lady Kidron, for the first time in the decade that I have been in the House. I support her Amendment 137. She has given a good exposé as to why we should think really carefully about how we protect children in this AI world. I would just like to add one point about AI itself.

We keep being told—in a good way—that AI is an underlying and general-purpose technology. That means we need to properly establish the principles with which we should protect children there. We know that technology is morally neutral; it is the human beings who do the damage. In every other underlying, breakthrough technology, we have learned that we have needed to protect the most vulnerable, whether it was electricity when it first went into factories, toys when they were first distributed on the mass market, or social media, with the age-appropriate design code. I feel that it would be a huge mistake, on the third Bill where many of us have debated this subject matter, for us not to address the fact that, as of today, this is the biggest breakthrough technology of our lifetime. We should recognise that children will need protecting, as well as having the opportunity to benefit from it.

--- Later in debate ---

Moved by

[Baroness Harding of Winscombe]

95: Clause 77, page 91, line 16, leave out “to the extent that” and insert “when any one or more of the following is true”
Member’s explanatory statement
This amendment would clarify that only one condition under paragraph 5 must be present for paragraphs 1 to 4 to not apply.

[Baroness Harding of Winscombe (Con)]

My Lords, I was in such a hurry to apologise just now for missing Second Reading that I forgot to declare my interests and remind the Committee of my technology and, with regard to this group, charitable interests as set out in the register.

I shall speak to Amendments 95, 96, 98, 101, 102 and 104 in my name and those of the noble Lords, Lord Clement-Jones and Lord Stevenson of Balmacara, and my noble friend Lord Black of Brentwood, and Amendments 103 and 106 in my name and those of the noble Lords, Lord Clement-Jones and Lord Stevenson. I also support Amendment 162 in the name of the noble Lord, Lord Clement-Jones. I will speak only on the marketing amendments in my name and leave the noble Lord, Lord Clement-Jones, to do, I am sure, great justice to the charitable soft opt-in.

These amendments are nothing like as philosophical and emotive as the last amendment on children and AI. They aim to address a practical issue that we debated in the late spring on the Data Protection and Digital Information Bill. I will not rehearse the arguments that we made, not least because the Minister was the co-signatory of those amendments, so I know she is well versed in them.

Instead, I shall update the Committee on what has happened since then and draw noble Lords’ attention to a couple of the issues that are very real and present now. It is strange that all Governments seem reluctant to restrict the new technology companies’ use of our data but extremely keen to get into the micro detail of restricting older forms of our using data that we have all got quite used to.

That is very much the case for the open electoral register. Some 63% of people opt out of being marketed at, because they have put their name as such on the electoral register. This is a well known and well understood use of personal data. Yet, because of the tribunal ruling, it is increasingly the case that companies cannot use the open electoral register and target the 37% of people who have said that they are quite happy to receive marketing unless the company lets every single one of those users know that they are about to market to them. The danger is that we create a new cookie problem—a physical cookie problem—where, if you want to use a data source that has been commonplace for 40 years, you have to send some marketing to tell people that you are about to use it. That of course means that you will not do so, which means that you reduce the data available to a lot of small and medium-sized businesses to market their products and hand them straight to the very big tech companies, which are really happy to scrape our data all over the place.

This is a strange one, where I find myself arguing that we should just allow something that is not broken not to need to be fixed. I appreciate that the Minister will probably tell us that the wording in these amendments is not appropriate. As I said earlier in the year—in April, in the previous incarnation—I very much hope that if the wording is incorrect we could, between Committee and Report, have a discussion and agree on some wording that achieves what seems just practical common sense.

The tribunal ruling that created this problem recognised that it was causing a problem. It stated that it accepted that the loophole it created would allow one company, Experian, a sizeable competitive advantage. It is a slightly perverse one: it means that it has to let only 5 million people know that it might be about to use the open electoral register, while its competitors have to let 22 million people know. That just does not pass the common-sense test of practical use of data. Given the prior support that the Minister has shown for this issue, I very much hope that we can resolve it between Committee and Report. I beg to move.

[Lord Lucas (Con)]

My Lords, I have a couple of amendments in this group, Amendments 158 and 161. Amendment 158 is largely self-evident; it tries to make sure that, where there is a legal requirement to communicate, that communication is not obstructed by the Bill. I would say much the same of Amendment 161; that, again, it is obvious that there ought to be easy communication where a person’s pension is concerned and the Bill should not obstruct it. I am not saying that these are the only ways to achieve these things, but they should be achieved.

I declare an interest on Amendment 160, in that I control the website of the Good Schools Guide, which has advertising on it. The function of advertising on the web is to enable people to see things for free. It is why it does not close down to a subscription-only service. If people put advertisements on the web, they want to know that they are effective and have been seen, and some information about who they have been seen by. I moved a similar amendment to the previous Government’s Bill and encountered some difficulty. If the Government are of the same mind—that this requires us to be careful—I would very much welcome the opportunity of a meeting between now and Report, and I imagine others would too, to try to understand how best to make sure that advertising can flourish on the internet.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Baroness very much for that very helpful intervention. If she has any more information about the view of the Charity Commission, we would obviously like to engage with that because we need to get this right. We want to make sure that individuals welcome and appreciate the information given to them, rather than it being something that could have a negative impact.

I think I have covered all the issues. I hope those explanations have been of some reassurance to noble Lords and that, as such, they are content not to press their amendments.

[Baroness Harding of Winscombe (Con)]

May I just follow up by asking one quick question? I may be clutching at straws here but, in responding to the amendments in my name, she stated what the ICO believes rather than what the Government believe. She also said that the ICO may think that further permission is required to ensure transparency. I understand from the Data & Marketing Association that users of this data have four different ways of ensuring transparency. Would the Minister agree to a follow-up meeting to see whether there is a meeting of minds with what the Government think, rather than the ICO?

[Baroness Jones of Whitchurch (Lab)]

I am very happy to talk to the noble Baroness about this issue. She asked what the Government’s view is; we are listening very carefully to the Information Commissioner and the advice that he is putting together on this issue.

[Lord Lucas (Con)]

My Lords, I am very grateful for the answers the noble Baroness gave to my amendments. I will study carefully what she said in Hansard, and if I have anything further to ask, I will write to her.

[Baroness Harding of Winscombe (Con)]

My Lords, in response—and very briefly, given the technical nature of all these amendments—I think that we should just note that there are a number of different issues in this group, all of which I think noble Lords in this debate will want to follow up. I thank the many noble Lords who have contributed both this time round and in the previous iterations, and ask that we follow up on each of the different issues, probably separately rather than in one group, as we will get ourselves quite tangled in the web of data if we are not careful. With that, I beg leave to withdraw the amendment.

Amendment 95 withdrawn.

Digital Markets, Competition and Consumers Bill

Baroness Harding of Winscombe Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

[Baroness Harding of Winscombe (Con)]

My Lords, I fear that sometimes it is not enough that everything on an issue has been said; we have to make sure that everyone has said everything that needs to be said. I will be extremely brief but, as I raised this at Second Reading, I lend my voice in support of my noble friend Lord Mendoza’s amendment.

Can the Minister straightforwardly assure us that it is not the Government’s intention to prevent charities being able to access gift aid on membership subscriptions? If he can make that assurance, I expect him, as does the noble Lord, Lord Harris, either to accept this amendment or explain to us the Government’s alternative cunning plan to achieve the goal that I hope everyone in the Committee has.

[Lord Clement-Jones (LD)]

My Lords, I cannot think of a better introduction to an amendment than the different speeches we have heard. I belong to many of the organisations that have been mentioned. We all have a personal interest in so many of the organisations that depend on subscriptions.

The noble Lord, Lord Mendoza, talked about the impact of the possible loss of gift aid; the noble Lord, Lord Harris, on the issue of why gift aid could be lost; the noble Lord, Lord Vaizey, about the importance of subscriptions going forward; and the noble Baroness, Lady Young, about the different kinds of relationship this represents. To round it off, the noble Baroness, Lady Harding, started to hold the Minister’s feet to the fire with the questions that need asking. This amendment has been comprehensively and extremely well spoken to.

We have all had the NCVO briefing, which has a galaxy of different organisations all making the point that the Government really need to create an exemption. This is a very elegant solution that I hope the Government will adopt but, as the noble Baroness, Lady Harding, said, the Government need to reassure us that this was not intended as part of the new subscription regime. I very much hope that, at this moment, the Minister and the department are cooking up a solution as good as the one that the noble Lord, Lord Mendoza, has put forward, or that they are simply going to accept this. In terms of the arguments made, this has been a slam dunk. I would have thought that accepting the amendment of the noble Lord, Lord Mendoza, is a total no-brainer, otherwise I can see Report stage being carnage.

Digital Markets, Competition and Consumers Bill

Baroness Harding of Winscombe Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

[Lord Vaizey of Didcot (Con)]

My Lords, as I have been cited by the noble Lord, Lord Faulks, it is incumbent on me to speak on the same principles as him. Everything that I want to say has already been said, but that will not stop me putting in my two pennies’ worth. This is the stuck-record part of the debate, where I repeat what I said at Second Reading and simply put on record my support for all these amendments.

I will pick up on what some noble Lords said in their comments. I wholeheartedly endorse what my noble friend Lady Stowell said. In the real world, if you have an appeal on the merits of a fine, it seems almost impossible to see how you stop leakage into an appeal on the merits of the case. So you are, in effect, back to square one and, as the noble Lord, Lord Faulks, put it, the war of the lever arch file.

The speech by the noble Lord, Lord Tyrie, was fascinating and a master class on the different aspects of judicial review: an appeal on the merits, an appeal on JR-plus, or an appeal on JR. When I was a Minister, I dealt with this debate with Ofcom, when it started the process of wanting to move from appeals on the merits to appeals on JR. To the layman, an appeal on the merits is in effect a full rehearing of the case: you go back to square one and simply have the trial all over again. An appeal on JR means that you at least have to identify a flaw in the reasoning of the regulator when it comes to a judgment. If, in effect—here, I bow to the expertise of the noble Lord, Lord Tyrie—settled law informed by European directives means that some element of the merits of the case are taken into account in a JR appeal of a regulator, so be it. It may be the difference between a passive and an active decision, as it were.

In this Committee, we understand how you can judicially review a decision by a government department. When a regulator is making an active decision to bring a prosecution, and it then finds guilty the company that it is prosecuting, some element of the merits may well be taken into account. It seems to me that how it is drafted may well be important, but the clear intent should be that any appeal, whether on the actual decision or the level of the fine, should be an appeal based on JR, when it comes to how a judicial review is understood when appealing a decision by a regulator.

I finish with the simple point—this is the stuck-record part—that it clearly is the settled will of this Committee, and I suspect it will be the will of the House when this comes to Report, to constantly guard against giving the SMS companies too much opportunity to wriggle out of decisions made by the regulator.

I should add that a lot of the tone of my remarks at Second Reading and in Committee might make it seem that I am in the pocket of the regulator. I am certainly not. I have lots of concerns that, at other times, would make me say that I think the regulator often strays too far and interferes in far too many cases. I am not resiling from the fact that there clearly should be an opportunity to appeal its decisions. Often, it backs away before it gets to a decision, but its interference in mergers and takeovers sometimes leaves me slightly baffled, particularly when it involves companies that have very little presence in the UK market. I am not saying, by any stretch of the imagination, that the regulator is perfect, but I know that any procedure it undertakes, as it will do when this law is passed, will be long and expensive, so we must guard against making it even longer and even more expensive.

[Baroness Harding of Winscombe (Con)]

My Lords, I seem to have found my space in this Committee following my noble friend Lord Vaizey again. I have put my name to Amendments 65, 67, 71 and 72 in the name of the noble Baroness, Lady Jones.

I would like to add a possible new element to the discussion, as I am conscious that otherwise we are all just literally repeating each other’s words. My noble friend Lady Stowell talked about the practicalities of a full merits appeal for fines and her concerns. We should also think about the incentives on the designated firms and on the CMA.

Much of what we are debating in this Committee is about how we balance the inequality of arms between companies with enormous resources, and the concern that independent regulators, given a large amount of power, can occasionally make mistakes. That is the essence of this debate. The noble Lord, Lord Tyrie, spoke eloquently about the risk of regulators making mistakes. I wish to add to the discussion some facts about the sheer scale of the inequality of arms.

According to a number of different sources, the best public assessment we can get of Apple’s legal budget is that it is north of $100 billion a year. Bruce Sewell, who stepped down in 2017 after eight years as Apple’s general counsel, gave an interview to a student at Columbia Law School in 2019 in which he set out how he thinks about the legal department and the legal budget in a technology company. He said that, rather than take clearly safe actions, the job of the general counsel is to

“steer the ship as close to that line as you can, because that’s where the competitive advantage lies … you want to get to the point where you can use risk as a competitive advantage”.

So, when you have a $1 billion legal budget, you can afford to play the risk card on every review. You can afford to fully resource every full merits review, whereas when you are the regulator, with a substantially smaller legal budget, you cannot risk every single one of your decisions going to a full merits review.

The incentives are equally divergent. The incentive on the regulator is to be really risk-averse; to not risk being challenged. That means that you will not bring the case in the first place. As the noble Lord, Lord Tyrie, said last week, we know that we need to embolden our competition regulator. One of the big opportunities on leaving the EU is to have a much stronger competition regime because we know that that will drive stronger economic growth. But a full merits regime, in any part of the process, will make the regulator more risk-averse and will drive the incentive to sail closer to the wind, as Bruce Sewell said. Sailing closer to the wind means less collaboration with the regulator, because you are much better off playing your legal cards in the courts. In both those cases, that is not the regime that we are trying to design. We need to recognise that it is not just about practicalities; incentives are really hard to avoid if you have a full merits appeal process at any stage.

I am therefore left asking why the Government are proposing to do this for fines. The argument we have heard up to now is that the reason for doing so is to align with the Enterprise Act. However, as the noble Lord, Lord Tyrie, beautifully set out, they are not really aligning with anything in this regime, so that argument does not wash. It is not the same as the regulatory regime for appeals in the sector I come from, telecoms. As I said at Second Reading—I apologise for repeating it—I do not really understand why small telecoms companies, tiny in comparison with these tech giants, are fine to cope with a JR on fines decisions, but the large tech giants need the extra protection of a full merits review, in case they are fined too much money. It sounds like the worst form of tech exceptionalism. Looking at digital regulation in this House in the last couple of years, we have learned that the era of tech exceptionalism should be over and that technology companies are just the same as other companies. They are not wicked and evil but driven by incentives to do a good job for their stakeholders, and if we define the rules of the game to encourage them to use their legal budgets to challenge the regulator, that is what they will do.

Therefore, I am left to believe, as the noble Lord, Lord Tyrie, said, that the only reason for the change made on Report in the House of Commons was that it was part of some form of explicit or implicit deal to open a back door that will weaken the Bill, which will therefore not achieve what we want. I strongly support the amendments in the name of the noble Baroness, Lady Jones. Later we will come to how, if we accept them, we will ensure strong parliamentary scrutiny. I hope very much that we do not think we trade one for the other.

--- Later in debate ---

[Baroness Kidron (CB)]

The noble Lord, Lord Knight, has said so much of my speech that I will be very rapid. There are two points to make here. One is that regulatory co-operation is a theme in every digital Bill. We spent a long time on it during the passage of the Online Safety Act, we will do it again in the Data Protection and Digital Information Bill, and here it is again. As the noble Lord, Lord Knight, said, if the wording or the approach is not right, that does not matter, but any move to bring regulators together is a good thing.

The second point, which may come up again in amendments in a later group that looks at citizens, is that it is increasingly hard to understand what a user, a worker or a citizen is in this complicated digital system. As digital companies have both responsibilities and powers across these different themes, it is important, as I argued last week, to ensure that workers are not forgotten in this picture.

[Baroness Harding of Winscombe (Con)]

My Lords, it is with great trepidation that I rise to speak to these amendments because, I think for the first time in my brief parliamentary career, I am not complete ad idem with the noble Lord, Lord Knight, and the noble Baroness, Lady Kidron, on digital issues where normally we work together. I hope they will forgive me for not having shared some of my concerns with them in advance.

I kicked myself for not saying this last week, so I am extremely grateful that they have brought the issue back this week for a second run round. My slight concern is that history is littered with countries trying to stop innovation, whether we go back to the Elizabethans trying to stop looms for hand knitters or to German boatmen sinking the first steamboat as it went down the Rhine. We must be very careful that in the Bill we do not encourage the CMA to act in such a way that it stops the rude competition that will drive the innovation that will lead to growth and technology. I do not for a moment think that the noble Lord or the noble Baroness think that, but we have to be very cautious about it.

We also learn from history that innovation does not affect or benefit everybody equally. As we go through this enormous technology transformation, it is important that as a society we support people who do not necessarily immediately benefit or who might be considerably worse off, but I do not think that responsibility should lie with the CMA. Last week, the noble Lord, Lord Knight, challenged with, “If not in this Bill, where?” and I feel similarly about this amendment. It is right that we want regulators to co-operate more, but it is important that our regulators have very clear accountabilities. Having been a member of the Court of the Bank of England for eight years in my past life, I hate the fact that there are so many that the Bank of England must take note of in its responsibilities. We have to be very careful that we do not create a regime for the CMA whereby it has to take note of a whole set of issues that are really the broad responsibility of government. Where I come back into alignment with the noble Lord, Lord Knight, is that I think it is important that the Government address those issues, just probably not in this Bill.

[Lord Ranger of Northwood (Con)]

My Lords, I rise with an equal amount of trepidation to the noble Baroness, Lady Harding. I am a new Peer in the House with a background in the technology industry and the delivery of digital services. Although we are talking about market competition, we are straying into a complex conversation around labour markets and digital skills—the fundamental, No. 1 topic that drives a lot of thinking in digital organisations. I refer noble Lords to my register of interests.

The complex nature of a global digital skills market is the one thing that is challenging all digital businesses at this point in their ability to deliver and drive innovation. It is so competitive; in fact, the hyper-competitiveness is driving the inability to deliver. People are cannibalising other organisations. The agility and speed at which the market is moving, the hyperinflation in pricing, the investments that people are trying to make—indeed, that international businesses are trying to make globally—and the length and longevity of those investments’ value are becoming increasingly challenging. Therefore, the CMA intervening and having some influence will be challenging. We will have to think hard about how to enable understanding; about the speed at which the market is moving; about where this kind of activity would take place; and about how it would operate, understanding the global size and scale of this challenge.

I view this market with some concern but also with some excitement because of its ongoing development. One thing that I have seen is the move from triage, where outsourcing and moving to international markets for labour skills in digital was a trend, to the emerging nearshore and onshore trend of looking at bringing more skills into local geographies. Why do I say that? I say it because of the speed of the change in the market. If we try to regulate and legislate for that speed, it will be extremely challenging.

Humbly, that is the point I wanted to make at this stage of the debate.

--- Later in debate ---

[Baroness Kidron (CB)]

Indeed.

[Baroness Harding of Winscombe (Con)]

My Lords, I promise I will speak briefly to associate myself with the remarks of my noble friend Lady Stowell and support her Amendment 77 and Amendment 76 in the name of the noble Viscount, Lord Colville.

Despite the fact that there are fewer of us here than there have been in the debates on some of the other quite contentious issues, this is an extremely important amendment and a really important principle that we need to change in the Bill. To be honest, I thought that the power granted to the Secretary of State here was so egregious that it had to have been inserted as part of a cunning concession strategy to distract us from some of the other more subtle increases in powers that were included in the other place. It is extremely dangerous, both politically and technocratically, to put an individual Secretary of State in this position. I challenge any serious parliamentarian or politician to want to put themselves in that place, as my noble friend Lady Stowell said.

On its own, granting the Secretary of State this power will expose them to an enormous amount of lobbying; it is absolutely a lobbyist’s charter. This is about transparency, as the noble Baroness, Lady Kidron, said, and parliamentary scrutiny, which we will come to properly in our debate on the next group of amendments. However, it is also about reducing the risk of lobbying from the world’s most powerful institutions that are not Governments.

For those reasons, I have a slight concern. In supporting Amendment 77, I do not want the Government or my noble friend the Minister to think that establishing parliamentary scrutiny while maintaining the Secretary of State’s powers would be a happy compromise. It would be absolutely the wrong place for us to be. We need to remove the Secretary of State’s powers over guidance and establish better parliamentary scrutiny.

[Lord Clement-Jones (LD)]

My Lords, it has been very interesting to listen to noble Lords on this amendment. I am getting a strong sense of déjà vu from our debates on the then Online Safety Bill.

The noble Viscount, Lord Colville, made a devastating case for the deletion of the Secretary of State’s power, and the noble Baroness, Lady Stowell, made a superb case for the inclusion of parliamentary oversight over the guidance. The fact is that, just as we argued in our debates on the then Online Safety Bill, there is far too much power for the Secretary of State in this Bill. This example is the most egregious, but there are so many other aspects that one could argue with, and have argued with—the noble Viscount reminded us of his earlier amendments—such as the conditions for an undertaking to have an SMS designation; the turnover condition; the permitted types of conduct requirements; the period during which the DMU must decide which terms to include in the final transaction under the final offer mechanism; the amount of penalties imposed by the DMU on individual undertakings; and the DMU’s statement of policy on penalties. That is a heck of a lot of different powers for the Secretary of State and, as I say, power over guidance is the most egregious of them.

The way in which the noble Baroness, Lady Stowell, expressed this was exactly right. We will come on to parliamentary scrutiny in our debate on the next group, but the word “accountability” is crucial. Of course the regulator should be independent but, at the same time, it should be accountable. This is not just a licence to roam beyond the bounds; it is the right and duty of Parliament to have oversight of the regulator, which is exactly what this amendment would provide for. You have only to look at the draft that was put together of the Overview of the CMA’s Provisional Approach to Implement the New Digital Markets Competition Regime to see just how broad the Secretary of State’s powers over the way in which the CMA carries out its functions will be. That is why this is such an important amendment.

I very much hope that the Minister will hear our voices. This is a really important area of the Bill. As the Minister can see, it is something about which, having had the experience of the then Online Safety Bill, we feel very exercised.

--- Later in debate ---

[Baroness Harding of Winscombe (Con)]

My Lords, I will be brief. It is an honour to follow the noble Lord, Lord Fox, and his passionate exposé about the importance of interoperability while reminding us that we should be thinking globally, not just nationally. I did not come expecting to support his amendment but, as a result of that passion, I do.

I rise to support my noble friend Lady Stowell. She set out extremely clearly why stronger parliamentary oversight of the digital regulators is so important. I speak having observed this from all possible angles. I have been the chief executive of a regulated company, I have chaired a regulator, in the form of NHS Improvement, I have been on the board of a regulator, in the form of the Bank of England and I am a member of my noble friend’s committee. I have genuinely seen this from all angles, and it is clear that we need to form a different approach in Parliament to recognise the enormous amounts of power we are passing to the different regulators. Almost all of us in Committee today talked about this when the Online Safety Bill was passing through our House, and it was clear then that we needed to look at this. We have given enormous power to Ofcom in the Online Safety Act; this Bill looks at the CMA and very soon, in this same Room, we will be looking at changing and increasing the powers of the ICO, and if we think that that is it, we have not even begun on what AI is going to do to touch a whole host of regulators. I add my voice to my noble friend’s and congratulate her on the process that she seems to be well advanced in in gathering support not just in this House but in the other place.

I also express some support for Amendment 83. I am concerned that if we are not careful, the easiest way to ensure that the CMA is not bold enough is to not resource it properly. Unlike the passage of the Online Safety Act, where we got to see how far advanced Ofcom was in bringing in genuine experts from the technology and digital sector, it has not yet been so obvious as this Bill has progressed. That may be just because of the stage we are at, but I suspect it is also because the resourcing is not yet done in the CMA. Therefore, I ask the Minister for not so much an annual update as a current update on where the CMA is in resourcing and what support the Government are giving it to ensure it is able to meet a timetable that still looks painfully slow for this Bill.

[Baroness Kidron (CB)]

My Lords, I rise mainly to correct the record that I called the amendment in the name of the noble Baroness modest and also to celebrate the fact that I am once again back on the side of the noble Baroness, Lady Harding; it was very uncomfortable there for a moment.

I was on both committees that the noble Baroness, Lady Stowell, referred to. We took evidence, and it was clear from all sorts of stakeholders that they would like to see more parliamentary engagement in the new powers we are giving to regulators. They are very broad and sometimes novel powers. However, the point I want to make at this moment is about the sheer volume of what is coming out of regulators. I spent a great deal of my Christmas holiday reading the 1,500 pages of consultation material on illegal harms for the Online Safety Act, and that was only one of three open consultations. We need to understand that we cannot have sufficient oversight unless someone is properly given that job. I challenge the department and Secretary of State to have that level of oversight and interest in things that are already passed. So, the points that the noble Baroness made about resource and capacity are essential.

My other, very particular, point is on the DRCF. I went to a meeting—it was a private meeting, so I do not want to say too much, but fundamentally people were getting together and those attending were very happy with their arrangements. They were going to publish all sorts of things to let the world know how they, in their combination, saw various matters. I asked, “Is there an inbox?” They looked a little quizzical and said, “What do you mean?” I said, “Well, are you taking information in, as a group, as well as giving it out?” The answer was no, of course, because it is not a described space or something that has rules but is a collection of very right-minded people. But here in Committee, we make the point that we need good processes, not good people. So I passionately support this group of amendments.

I briefly turn to the amendment tabled by the noble Lord, Lord Fox, in which there is an unexpected interest in that I work with the IEEE, America’s largest standards organisation, and with CEN-CENELEC, which does standards for the European Union. I also have a seat on the Broadband Commission, which is the ITU’s institute that looks after the SDGs. Creating standards is, as a representative of Google once said to me, soft power. It is truly global, and as we create and move towards standards, there are often people in their pyjamas on the other side of the world contributing because people literally work in all time zones to the same effect. It is a truly consensual, global and important way forward. Everyone who has used the wifi today has used an IEEE standard.

Digital Markets, Competition and Consumers Bill

Baroness Harding of Winscombe Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Baroness Harding of Winscombe (Con)]

My Lords, it is a privilege to follow the noble Lord, Lord Vaux, and his really detailed and insightful analysis of my old industry—telecoms—among other things. I am sure my noble friend the Minister will be pleased that I rise, as the last Back-Bench speaker, to support the Bill.

I should declare my interest. I am never quite sure when I should and should not declare my relationship with my husband in the other place, but as he was so fully quoted in the Lords briefing, I feel I should reference that my husband tends to lead on competition issues in our family and I lead on digital things, so this Bill brings us together.

I strongly support the Bill. As many noble Lords have said, it has the potential to really drive innovation and investment, and to bring immediate consumer benefits. We should all warmly support it. I am also pleased to see it finally here.

I will speak primarily and very briefly on Part 1 and the competition elements. Large companies the world over try to persuade us that investment and competition are a trade-off. Time and again we have seen that that is not the case. I come to this with experience of running a challenger telco in an ex ante competition regime. Large incumbents rarely create real innovation. They spend a huge amount of money on it, and they are very proud of telling us how much they spend, but big leaps of innovation rarely come from the incumbents. That is the first thing that is true of nearly all these markets.

The second is that they spend even more money protecting their oligopoly or monopoly. I think it was Niklas Zennström, one of the founders of Skype, who originally said something like, “The thing about monopolies is that they’re like children. If you don’t have any you don’t really understand what the fuss is all about, but once you have one you will do everything in your power to protect them”. We should have no illusions: that is what big tech is doing during the passage of this Bill. It is not wicked and evil; it is entirely rational. If you have an oligopoly or a monopoly, you will protect it to the end.

Digital is no different from every other market where these forces are at play. We have exactly these two forces. Innovation is not coming from the incumbents. OpenAI is not an incumbent. Many noble Lords referenced Google, the original innovator, against the incumbent, Microsoft. We should not allow ourselves to be deceived by the big sums of money that incumbents spend on innovation to believe that the digital innovation will come from them. Equally, we should recognise how much power they will bring to bear to try to protect their existing monopolies. The noble Lords, Lord Fox and Lord Knight, gave such erudite descriptions of the theory and practice of what is happening that I will not repeat them, except to say that it is a pleasure to be back working with them together, as we all did on the Online Safety Act.

Digital is different, though, in a couple of ways. First, it tends to network monopolies in an extraordinary way, partly because the companies in it that succeed make so much money. The leveraging principle is alive and well as they acquire every little start-up around them to leverage the monopoly they already have. The second thing that is very different from other markets with network monopolies is the speed at which these things happen. The third is how interconnected and complex the digital architecture is.

All this means that it is really important that we understand how the package of measures in this Bill will work. We will have to descend into the fine, technical detail if we are to ensure we really do balance these forces that are against real innovation and real competition. As my noble friend Lady Stowell said, I feel that the Government got the balance right in the original Bill—that was the Goldilocks spot. I am sad that virtually every speaker has said the same thing: that we have moved slightly off the Goldilocks spot, and that every one of the changes brought in on Report in the other place moved the Bill towards the power of big tech and made it just a little harder for the regulator to do its job.

I fear I will list the same concerns as many other noble Lords: the full merits appeal, the move for fines, the Secretary of State’s approval of all guidance, the removal of “indispensable” from Clause 29(2)(c), the leveraging principles, the benefits for consumers, the wording in Clause 19, and the lack of third-party consultation rights, which means that the little guy does not get a fair shout in a JR process. We will have to look at all those in considerable detail as we go through Committee.

I shall briefly speak on the first one, the full merits appeal for fines. I have run a little business in a full judicial review world, in a judicial review-plus world, and in a full merits world. In fact, I had a great row with my regulatory director at TalkTalk when Ofcom was consulting on moving away from full merits to the JR standard. The regulatory team at TalkTalk thought that it might win a full merits appeal, because it had in the past won one in five years, so it did not like the idea of giving that up. My chairman at the time and I had to overrule them and say, “We might be able to fight one of those battles in the next five years, but BT will fight every single one—maybe 20 a year. Our pockets aren’t deep enough; we just don’t have the money”.

It is hugely tempting to believe that you will get to a better answer by full merits, but I fear my experience is that you do not. You tie everything up, so whoever benefits from things going slowly wins, whoever has the deepest pockets wins, and whoever is willing to take the risk to keep appealing again and again wins. That shifts the regulator’s risk appetite, because it does not have unlimited pockets, it does not have unlimited time and it cannot afford to keep losing. That means that the decisions it takes and the actions it chooses even to begin are reduced, simply because of the scale of the appeals risk. I really do not understand why tech companies, alone among network monopoly owners, are at risk of having their fines calculated incorrectly, in comparison with telcos, water companies and electricity businesses, all of which live in an ex ante regulatory regime with a JR standard for fines. I would be really keen to understand why we think tech exceptionalism needs to be added back into the Bill.

I am conscious of the time and will not take much longer. I pull us right back to look at the competition elements of the Bill in the round, because they are really important. There is a temptation this evening, for the small number of us who appear for all these debates on digital: as the noble Baroness, Lady Kidron, again said so eloquently, the danger is that people do not realise how important this is. This Bill could be every bit as important as the original anti-trust legislation in the US as the 19th century turned into the 20th. It is that important that we get this right.

I think we are quite well suited to going through the detail. Rather than ask my noble friend to respond on specifics today, I just ask him to reassure us that he will enter Committee in the same spirit in which many of us worked together on the Online Safety Act: recognising that we are trying to find that Goldilocks spot, and that this will require us to understand not just each individual issue but how the issues interrelate. The danger is that the pressures on large tech companies to influence and weaken the regime will enable them to play the game against us rather too well. They just chip away on one or two issues and, before you know it, you do not have a landmark piece of competition regulation; you have something that none of us can remember from the 19th century, when monopolists were doing rather well, before anti-trust legislation came in.

That is why I think this really matters, and very briefly I just add my words to the concerns about the subscription clauses. As the noble Lord, Lord Vaux, said, it is important that we protect consumers in this space. It looks like we have got something wrong on gift aid, judging by the number of people who have been emailing all of us. I think we have also got something wrong in the way that app developers work with the app stores. The app stores control subscriptions, and there is a real risk that once again we are putting the responsibility on the app developers, not recognising that the consumer needs to be able to cancel the actual subscription that Apple controls. We will need to look at those in considerable detail, otherwise we will have all these brilliant intentions but the legislation will not deliver what people need.