Digital Markets, Competition and Consumers Bill

Lord Knight of Weymouth Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Lord Knight of Weymouth (Lab)]

My Lords, it is a great pleasure, as ever and once more, to follow the noble Baroness, Lady Stowell. I particularly endorse the comment she made about having a Joint Committee, which I also made repeatedly during the course of the Online Safety Act. I am pleased to note the precedent she noticed, which I did not, and I support what she had to say. I remind your Lordships of my interests in the register, particularly as the chair of tech company CENTURY Tech and a co-owner of Suklaa Limited, which has a number of tech clients.

Like all other speakers so far, I very much welcome the Bill but, like everybody else, I think except for the Minister, I question whether it goes far enough in creating a sufficiently robust regime to hold the large tech companies to account. I do not necessarily want to bash them, but it is notable that they are particularly wealthy and particularly litigious. If we want to have a meaningful regime, we need a robust set of regulators to take them on. In September, the European Commission listed six of them—Alphabet, Amazon, Apple, Meta, Microsoft and ByteDance—as the gatekeepers under its new Digital Markets Act. That feels like roughly a good list of companies for us to keep in mind.

I was amused to look back, just over 20 years ago, to the anti-trust case taken against Microsoft. At that time, Microsoft was the gatekeeper as everyone was using personal computers to access the internet, and the likes of Apple were pushing for the competition authority in the US, the Federal Trade Commission, to take action, so that it could free up browsers and operating systems to allow consumers to access the internet through other sources. Happily, that pressure won out, and Microsoft had to yield and lost the anti-trust case. It is now time for us to take action, in particular on the issue of app stores. I am delighted that the noble Baroness, Lady Harding, is in her place, because she and I collaborated a little, and she led, on trying to get app stores included within the competence of the Online Safety Act. There is no doubt that we are now all accessing the internet predominantly on phones and iPads. The latest data that I have seen from Statista for this country says that, in the UK, 60% of us use smartphones as the most important device to access the internet, and another 12% use tablets such as iPads. That is 72% of us going through either the Apple App Store or the Android store to access the applications that we need to access content.

How do those app stores work? If you want to collect money through them, they take a percentage of that money—roughly 30%. That is on top of VAT at 20%, assuming you are liable to pay VAT, so you have lost 50% of your revenue before you have even started. That is a massive constraint on small businesses being able to get set up. We see that Spotify—one of the companies which have tried to come to talk to me—has, as I read in the newspaper, cut 1,500 jobs today. Perhaps if it was able to keep some more of its revenue and not have it taken by one or the other of those two platforms, some of those jobs would not be lost.

But it is about more than the money: it is also about the data that those two companies can collect through their app stores and analyse to see what applications, and what features within those, are doing well. Then, if they choose to, they can create competitor applications or block applications that they are concerned about. They will not block them overtly: they will just delay the process of approval through their systems—lo and behold, another release of iOS or other operating system is published, and the apps go to the back of the queue in the test pilot system before they can get approval to get on to the app store. All that is a massive constraint on small businesses being able to access and enter the market. I was struck by the speech by the noble Baroness, Lady Hayman, on planned obsolescence—that use of the release of the operating systems to make our devices obsolete is something that a powerful regulator could really help with, in ensuring that our devices remain current.

We need to act urgently in this country, and we need to be able to act internationally as well. Does the Minister honestly believe we have enough powers in the Bill for us to take on the really tricksy issue of these app stores? Will we be able to force them to offer alternative payment systems, so they do not cream off all the money, or systems so that, if I wanted to download an application on my iPhone, I would not have to go through the app store if I did not want to, so that we could then open up to more competition?

I move on to the issue of data a little more. In this House, I have previously raised my concern that an individual such as Elon Musk has all that data on transport movements through Tesla, on communications through his satellite company and on sentiment through his ownership of the company that used to be known as Twitter. That is just one example of a consolidation through horizontal integration, if you like, of data ownership. He, or others in similarly powerful positions, can point the same artificial intelligence machine at each of those individual data lakes, even if they are kept discrete, and get the benefit of being able to train the AI on the different sources of data and create power that nobody else has access to. That would give him a massive competitive advantage.

But it is bigger than just Musk: if you look at the amount of data that Google is collecting about us all at any given time, with all the integration that it has —or any one of the six tech giants that I listed earlier —it is a massive issue. Again, the CMA needs to have some ability to go after this data ownership issue, which is not about verticals but horizontals. I am not sure that it is within the regime or the thinking at the moment, and I would love to hear the Minister’s reassurance on it.

Like the noble Viscount, Lord Colville, I have concern around the competitive landscape for digital advertising. In the second quarter of 2022, Meta and Google made up 87.3% of total ad spend in the UK. It has fallen slightly since, with a greater share being invested in mobile-first platforms such as Snapchat and TikTok. This is in the context of online advertising spending making up 25% of total ad spend in this country. The DCMS has reviewed it and said that there is a lack of transparency and a need for action. However, at the end of its report, the DCMS says:

“In order to be ready to bring forward legislation to implement these reforms when Parliamentary time allows, we will be issuing a further consultation seeking views on these proposals”.


We have a vehicle here in the Bill. Why are we not taking action now to open up competition in digital advertising? Why are we waiting for parliamentary time when we have time now? Where is the sense of urgency from the Government around this important issue that the noble Viscount referred to?

Like others, I have looked at the correspondence on gift aid and would support action to be taken on it.

I know that the noble Baroness, Lady Kidron, who will be speaking later, has also raised the important issue of researcher access, which we came to in the Online Safety Act. Again, if we could use this vehicle to open up researcher access via the regulator to these large companies, then we could have some oversight over what is going on, so that we could inform better parliamentary scrutiny and regulation of these large, powerful and litigious organisations.

In the end, this is about the power of the internet for good and for ill. As we have heard, we have a suite of legislation before us, of which this is just one Bill, in order to create, hopefully, powerful, agile regulators who can collaborate and give confidence and safety for consumers to realise the transformational potential of technology and not the harms that we are all concerned about.