Digital Markets, Competition and Consumers Bill

Debate between Lord Knight of Weymouth and Viscount Camrose

Committee stage
Monday 22nd January 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)]

My Lords, I am pleased to speak on this first day of Committee and thank all noble Lords for their continued and valued engagement on the DMCC Bill, which, as many noble Lords have observed, will drive innovation, grow the economy and deliver better outcomes for consumers. I am grateful for noble Lords’ continued scrutiny and am confident that we will enjoy a productive debate.

I start by briefly speaking to government Amendments 11 and 12, which I hope noble Lords will support. They make the strategic market status notice provisions consistent by obliging the Competition and Markets Authority to provide reasons for its decision not to designate a firm following an initial SMS investigation.

I turn to Amendment 1, tabled by the noble Baroness, Lady Jones of Whitchurch. The amendment seeks to ensure that the CMA will be able to use, in its SMS investigations, previous analysis undertaken in related contexts. I agree entirely that the CMA should not have to repeat work that it has already done and should be able to draw on insights from previous analysis when carrying out an SMS investigation, when it is appropriate and lawful to do so.

I offer some reassurance to the noble Baroness that the Bill as drafted permits the CMA to rely on evidence that it has gathered in the past, so long as it is appropriate and lawful to do so. As she highlighted, a strength of the regime is the flexibility for the CMA to consider different harms in digital markets. I suspect that this is a theme that we will return to often in our deliberations, but being prescriptive about what information the CMA can rely on risks constraining the broad discretion that we have built into the legislation.

Amendments 3, 4, 5 and 6, tabled by the noble Lord, Lord Clement-Jones, would make it explicit that the CMA must consider currently available evidence of expected or foreseeable developments when assessing whether a firm holds substantial and entrenched market power in a digital activity. Amendment 3 would remove the duty for the CMA to consider such developments over a five-year period. The regime will apply regulation to firms for a five-year period; it is therefore appropriate that the CMA takes a forward look over that period to assess whether a firm’s market power is substantial and entrenched, taking account of expected or foreseeable developments that might naturally reduce the firm’s market power, if it were not designated.

Without an appropriate forward look, there is a risk that designation results in firms facing disproportionate or unnecessary regulation that harms innovation and consumers. However, the CMA will not be required to prove that a firm will definitely have substantial and entrenched market powers for the next five years—indeed, that would be impossible. The CMA will have to give reasons for its decisions to designate firms and support any determination with evidence. As a public body, it will also be subject to public law principles, which require it to act reasonably and take into account relevant considerations. Therefore, in our view, these amendments are not necessary.

Amendment 7, tabled by the noble Viscount, Lord Colville of Culross, seeks to remove the power for the Secretary of State to amend by regulations subject to the affirmative procedure the conditions to be met for the CMA to establish a position of strategic significance. I recognise, first, that Henry VIII powers should be used in legislation only when necessary. To the point raised by my noble friend Lady Harding, I also recognise the importance of limiting the scope for too much disputation around this and for too many appeals. In this case, however, the power helps to ensure that the regime can adapt to digital markets that evolve quickly and unpredictably.

Changes in digital markets can result from developments in technology, business models, or a combination of both. The rapid pace of evolution in digital markets, to which many have referred, means that the CMA’s current understanding of power in these markets has changed over the past decade. The concept of strategic significance may therefore also need to evolve in future, and the conditions to be updated quickly, so that the regime remains effective in addressing harms to competition and consumers effectively. The affirmative resolution procedure will give Parliament the opportunity to scrutinise potential changes. It will provide a parliamentary safeguard to ensure that the criteria are not watered down, and should address the noble Lord’s concerns regarding lobbying. For these reasons, I believe that it is important to retain this power.

[Lord Knight of Weymouth (Lab)]

To look at Clause 6 and the four conditions laid down there, they appear pretty generic, in terms of size; the number of undertakings; the position in respect of digital activity, which would allow an extension of market power; and the ability to influence the ways in which other undertakings conduct themselves. They are generic conditions, so can the Minister give us a bit more of a taste of the kind of thing that just might crop up? I know that he does not have a crystal ball, but could he tell us what might crop up that would require these Henry VIII powers to be used?

--- Later in debate ---

[Lord Knight of Weymouth (Lab)]

Which regulators is the Minister thinking of? I am interested in Clauses 107 and 108, which are about regulatory co-ordination and information sharing, and whether there is something we should do there with those regulators. If he could give us a hint as to which regulators he is thinking of, that would be really helpful.

[Viscount Camrose (Con)]

I refer to the digital regulators themselves—the ICO or the FCA and Ofcom—or indeed regulators with oversight of employment law.

Amendment 61 would enable the CMA to require algorithmic impact assessments, to assess the impact of algorithms on society and the environment, including working conditions, if it considered such information relevant to its digital markets functions. I agree wholeheartedly with the noble Lord about the importance of understanding the impact of algorithmic systems on society, the environment and working conditions in the UK.

[Viscount Camrose (Con)]

Yes, I think that I am saying that. The CMA, over the course of its investigations, can come across information beyond its own competitive remit but relevant for other regulators, and then could and should choose to advise those other regulators of a possible path for action.

[Lord Knight of Weymouth (Lab)]

In that sense, could the CMA ask for an impact assessment on the algorithmic harm that might be carried out? Would that be in the power and remit of the CMA?

[Viscount Camrose (Con)]

The CMA does have power and remit to request an algorithmic impact assessment. I will take advice on this, because I believe that the algorithmic assessment that it undertakes must be in the direction of understanding anti-competitive behaviours, rather than a broader purpose. I will happily take advice on that.

As the Bill stands, the CMA will already have sufficient investigatory powers to understand the impact of complex algorithms on competition and consumers. The suggested expansion of this power would fall outside the role and remit of the CMA. Moreover, the CMA would not have appropriate tools to address such issues, if it did identify them. The Government will continue to actively look at whether new regulatory approaches are needed in response to developments in AI, and will provide an update on their approach through the forthcoming AI regulation White Paper response.

I thank the noble Lord once again for raising these important issues and hope that he feels able to withdraw the amendment.

Artificial Intelligence: Regulation

Debate between Lord Knight of Weymouth and Viscount Camrose

Tuesday 14th November 2023 Lords Chamber

[Viscount Camrose (Con)]

I am pleased to tell my noble friend that, following a request from the Secretary of State, the safety policies of Amazon, Anthropic, Google DeepMind, Inflection, Meta, Microsoft, OpenAI and others have been published and will go into what we might call a race to the top—a competitive approach to boosting AI safety. As for enshrining those practices in regulation, that is something we continue to look at.

[Lord Knight of Weymouth (Lab)]

My Lords, further to the question from the noble Lord, Lord Holmes, around data—that the power of the AI is in many ways defined by the quality of the data—does the Minister have any concern that the Prime Minister’s friend, Elon Musk, for example, owns a huge amount of sentiment data through Twitter, a huge amount of transportation data through Tesla, and a huge amount of communication data through owning more than half the satellites orbiting the planet? Does he not see that there might be a need to regulate the ownership of data across different sectors?

[Viscount Camrose (Con)]

Indeed. Of course, one of the many issues with regulating AI is that it falls across so many different jurisdictions. It would be very difficult for any one country, including the US, to have a single bit of legislation that acted on the specific example that the noble Lord mentions. That is why it is so important for us to operate on an international basis and why we continue not just with the AI safety summit at Bletchley Park but working closely with the G7 and G20, bodies of the UN, GPAI and others.

Online Safety Bill

Debate between Lord Knight of Weymouth and Viscount Camrose

Committee stage
Thursday 25th May 2023 Lords Chamber

[Viscount Camrose (Con)]

I think I probably would agree, but I would welcome a chance to discuss it further.

Finally, Amendment 229 intends to probe how Ofcom will review the effectiveness of transparency requirements in the Bill. It would require Ofcom to produce reports reviewing the effectiveness of transparency reports and would give the Secretary of State powers to implement any recommendations made by the regulator. While I of course agree with the sentiment of this amendment, as I have outlined, the transparency reporting power is designed to ensure that Ofcom can continuously review the effectiveness of transparency reports and make adjustments as necessary. This is why the Bill requires Ofcom to set out in annual transparency notices what each provider should include in its reports and the format and manner in which it should be presented, rather than putting prescriptive or static requirements in the Bill. That means that Ofcom will be able to learn, year on year, what will be most effective.

Under Clause 145, Ofcom is required to produce its own annual transparency report, which must include a summary of conclusions drawn from providers’ transparency reports, along with the regulator’s view on industry best practice and other appropriate information—I hope and think that goes to some of the points raised by the noble Lord, Lord Allan of Hallam.

[Lord Knight of Weymouth (Lab)]

My Lords, just before the Minister moves on—and possibly to save me finding and reading it—can he let us know whether those annual reports by Ofcom will be laid before Parliament and whether Parliament will have a chance to debate them?

[Viscount Camrose (Con)]

I believe so, but I will have to confirm that in writing. I am sorry not to be able to give a rapid answer.

Clause 159 requires the Secretary of State to review in total the operation of the regulatory framework to ensure it is effective. In that review, Ofcom will be a statutory consultee. The review will specifically require an assessment of the effectiveness of the regulatory framework in ensuring that the systems and processes used by services provide transparency and accountability to users.

The Bill will create what we are all after, which is a new culture of transparency and accountability in the tech sector. For the reasons I have laid out, we are confident that the existing provisions are sufficiently broad and robust to provide that. As such, I hope the noble Lord feels sufficiently reassured to withdraw the amendment.

[Lord Knight of Weymouth (Lab)]

My Lords, that was a good, quick debate and an opportunity for the noble Viscount to put some things on the record, and explain some others, which is helpful. It is always good to get endorsement around what we are doing from both the noble Lord, Lord Allan, and the noble Baroness, Lady Fox. That is a great spread of opinion. I loved the sense of the challenge as to whether anyone ever reads the transparency reports whenever they are published; I imagine AI will be reading and summarising them, and making sure they are not written as gobbledygook.

On the basis of what we have heard and if we can get some reassurance that strong transparency is accompanied by strong parliamentary scrutiny, then I am happy to withdraw the amendment.