Digital Markets, Competition and Consumers Bill

Grahame Morris Excerpts

Report stage
Monday 20th November 2023 Commons Chamber

[Sir Robert Buckland]

What my hon. Friend outlines is precisely what we are seeking. In making these arguments, we are not in some way the friends of big tech; we are not here to represent a particular sectoral interest. My amendment was drafted by me and by senior counsel from Monckton Chambers, including Philip Moser KC, who regularly appears both for and against big tech in these matters. I thought it right to seek some independent pro bono advice on the operation of competition law to make sure that, in developing the law in this way, we do not create entirely untested mechanisms that would—guess what?—require litigation to clarify.

The point is that we should be seeking to minimise more interpretive language that will require to be tested in the courts. That is why I take slight issue with what was said by the hon. Member for Pontypridd (Alex Davies-Jones), whom I respect very much. In amendment 186, I seek to replace the word “indispensable” with “necessary”, because I think that is a much clearer term that everyone would understand and that would, in itself, be a high threshold for the affected company in demonstrating consumer benefit in the countervailing consumer benefit test.

I think that, rather than trying to use and develop new language, we should look back and learn from the experience of telecoms regulation. One of the problems in, in effect, handing considerable power to the new digital markets unit is that the legal landscape relating to this activity is unformed. Unlike the landscape that underpinned the Competition Act 1998, we do not have the advantage of years of EU and UK court interpretation that was then applied by guidelines issued by the CMA.

[Grahame Morris (Easington) (Lab)]

The right hon. and learned Gentleman is articulate in presenting the case and knowledgeable about the issue, but may I distil it down to an issue of fairness that everyone can understand? Before our very eyes, the landscape is changing. Long-established titles, newspapers and publications are disappearing and retrenching. Thousands of journalists are losing their jobs. Is it not a matter of basic fairness that people who create the content should be properly compensated?

[Sir Robert Buckland]

The hon. Gentleman is right to make that point. That is why in other jurisdictions we have seen agreement reached between big tech and newspaper titles to ensure that there is that element of fairness. I agree with him; I want to see similar fairness and equity applied across the market. What I and others who agree with me are trying to do is to ensure that, in creating this brave new world of energetic and efficient regulation, we do not as a Parliament upset the balance by giving too much power to a particular regulator. A lot of us in this place have watched with concern the failure of other types of regulation—in our water industry or our energy industry, for example. I do not think anybody would deny that, at times, we have got regulation wrong. That is why it is important that we have this debate.

There are people outside this place who have put pressure on us by saying, “The Bill is in perfect order. There is no need for you to look at it any more; great minds have thought about it.” I say to them that it is for this place to make those decisions. I do not look kindly on comments made by the chief executive of the CMA about the merits of what this place is considering while the Bill is in Parliament. I absolutely accept the independence of the CMA and the important role that it plays, but we should not confuse independence with lack of accountability. That is a point that I will warm to in a little while, when I address the relationship between regulators—in this case, the CMA—and Parliament. At the moment, that relationship is wholly inadequate.

I was making the point that, unlike the Competition Act 1998, there is a relative lack of worked-out court interpretation of this Bill’s subject matter. That has led to distinguished commentators—no less than Sir Jonathan Jones, former Treasury counsel—making the point in evidence to the Committee that, in effect, the DMU would be able to decide who was going to regulate, set the rules that apply and then enforce those rules. The phrase “legislator, investigator and executioner” was used. While that is colourful language—perhaps too colourful for a dry debate about competition law—it is important that we reflect on the view of that former Treasury solicitor and be very careful that in going down this road, we are not making false comparisons.

A lot has been said about Ofcom and its decisions, and comparisons have been made, but we must not forget that those Ofcom decisions were heavily governed by EU framework directive 2002/21. Article 4 of that directive says that on ex-ante telecom appeals,

“Member States shall ensure that the merits of the case are duly taken into account and that there is an effective appeal mechanism.”

That is a bit different from the provisions in the Bill. A simple JR-type review is precisely that, and no more.

I listened with interest to the intervention made by my right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright), who made a really good point that needs answering. We need to understand where proportionality comes into this. If the principle of proportionality is being used in the first instance, that is all well and good, but we need to understand how that fits with the provisions of the Bill: whether it implies that the courts deem every decision made by the DMU to be proportionate, or whether there is a way to challenge a particular decision by saying that it was not made according to the DMU’s own principles, acting in a proportionate way.

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It is important to understand the Government’s intention in introducing the proportionality test. A fundamental principle of proportionality applies to all EU law. In this case, we are writing the principle into the Bill. Obviously, the EU proportionality test will no longer apply here, so what is the intention behind introducing such a test? What is the certainty we seek to give? Can we be absolutely certain that there will be no unintended consequences, and that the test will not be used to widen the basis for appeal, given that so many factors could be considered in a fairly subjective test of proportionality? Is the definition clear enough and proof against abuse, so we can be confident that the judicial review standard, not a wider on-the-merits system, will be the basis of appeals?

[Grahame Morris]

I, too, welcome the new Minister to his place and congratulate him on his appointment. We all recognise that this is important, long-overdue legislation, so I wish him well in piloting it through the House. I also declare an interest: I am co-chair of the all-party parliamentary group for the National Union of Journalists. I receive no pecuniary advantage, directly or indirectly, and the NUJ is not affiliated to the Labour party or any other party, but it none the less makes some valid points, which I wish to raise today.

We face immense challenges and significant technological changes in the UK, and indeed globally, given the development of social media and the increasing use of artificial intelligence. In an era of fake news, there are few sources of news trusted more than our national, regional and much-loved local titles, which have stood the test of time and have deep roots in our communities. I have participated in a number of debates on the subject in Westminster Hall, and debates on the decline of our local newspapers and the need to support them are always over-subscribed.

It is important to be aware that professional journalism in the UK is in crisis. Reach PLC, the publisher of titles including The Mirror, the Daily Star and the Manchester Evening News, has announced a third round of redundancies, putting at risk as many as 800 journalist jobs. If we do not find means of fairly compensating established publishers and trusted sources of journalism, we will suffer from a less diverse media landscape, job losses, and the promotion of voices delivering fake news guided by hidden agendas.

Big tech continues to exploit its market dominance in digital advertising; it uses news content from professional journalists without giving any payment or compensation to the publishers who produce the content. This Bill is a positive step, which I welcome. It is welcomed by the NUJ, journalists and publishers. A functioning media market requires regulators to address the power imbalances that have emerged between major tech companies and the journalism industry in recent years.

Our established news titles and publishers are essential to democracy; they scrutinise Government and contribute to an informed society. Their content is being used to generate revenues for tech giants. They—the creators—must be guaranteed a fair share of revenues. Without quality news content on online platforms, the overall standard of information that we all consume will decline. It is in the collective interest of our Government, of all citizens of the country, and even of major tech companies to ensure the continued presence of quality journalism. That is relevant to the part of the Bill that allows the Competition and Markets Authority to initiate a final offer mechanism, which was referred to by my hon. Friend the Member for Pontypridd (Alex Davies-Jones)—I support Opposition amendments 187 and 188 for the reasons she gave. The final offer mechanism must be used only as a last resort, and not by big tech companies to bypass meaningful negotiations.

I also wish to reinforce the point made by my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey): meaningful and fair negotiations are vital if big tech companies are not to continue to exploit the current power dynamic, and place undue influence on smaller publishers in a way that does not recognise the true value of the original content that they produce. British journalism is valuable, and its value is quantifiable. News content used by tech giants is estimated to be worth around £1 billion a year in the UK. That revenue is essential to the health and wellbeing of professional journalism in the UK.

I welcome the stance of the House of Lords Communications and Digital Committee on the timely implementation of the Bill, and its recommendation that the Government

“resist pressure to weaken some of the Bill’s measures”.

I also echo what the NUJ and the News Media Association say about maintaining the option of judicial review for appeals against regulatory decisions.

Government amendments must be clarified—a number of Members, including my hon. Friend the Member for Pontypridd, have asked for this—to ensure that the Competition and Markets Authority can retain the flexibility to construct remedies for problems that arise, and to keep up with rapidly changing digital markets, especially when big tech has such a monopolistic position.

I urge the Minister to uphold a high threshold for exemption from penalties when tech firms breach the rules, so as to prevent misuse of exemption provisions by well-funded companies that employ expensive legal teams. The example of Everton Football Club comes to mind. It seems to me—not that I am an expert in these matters—that it is being heavily penalised. Other football clubs in the premier league that seem, on the face of it, to be guilty of far greater abuses have managed to avoid the penalties. It is crucial that we eliminate loopholes that could be exploited by big tech.

Whether we like it or not, people consume a lot of their news from the big tech giants. Research conducted by Ofcom found that Facebook is the third most popular place to consume news; a higher proportion of people go there than to the BBC or Sky News channels. Meta recently discontinued Facebook News in Europe, and that has a potential impact on news consumption. With almost half of news consumers relying on social media, it is imperative to ensure fair compensation for quality content on social media platforms.

Looking ahead, the NUJ seeks extensive engagement with the Government—I hope that the Minister will respond to this—on safeguarding the future of journalism, and on recognising the multi-faceted threats that it faces, including from emerging technologies such as artificial intelligence. It is imperative that this legislation quickly progress through Parliament, so that we can safeguard the integrity of UK news titles and publishers, and protect them from undue influence from big tech lobbyists who wish to water down much-needed reforms.

[Sir Jacob Rees-Mogg]

I am delighted to support the amendments in the name of my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland). It is important to get the balance right, and not to worry too much about phantasms and fears that will not arise. It is worth recalling that, in the 1970s, the Federal Trade Commission was on the cusp of opening an investigation into IBM for its monopoly in typewriters. Technology is changing so rapidly, and an over-zealous regulatory mechanism is more likely to damage and hold back innovation than advance it.

Think of the names that have come and gone over the past few years. Who now has a BlackBerry? We once again think of blackberries as a fruit, rather than a mechanism for communicating. Or a Nokia telephone? In the 1980s, Nokia made Wellington boots. It is probably now back to making them, as its telephone has come and gone and been overtaken. That is the thing about the sector that we are looking to regulate: there is competition in it. It is not necessarily a competition for market share at any one time; it is a competition of technology that is evolving faster than people are able to deal with it.

There is in the Bill a touching faith in the competence of regulators, which I do not share. The CMA, to which we are about to give significant powers, has made a fool of itself this year—and not just a little. It has been made a global laughing stock by its Microsoft Activision Blizzard ruling, in which it blundered. It got it wrong; all the other regulators in the world did something else, and the CMA had to back down. The story was—this is quite important—that the CMA was doing the work of the FTC, but the FTC had to meet a higher legal standard and therefore encouraged the CMA to make the bid more difficult, because it thought that the UK law would be easier to work around than US law. That is why the amendments on the judicial review standard are so important. I would be in favour of a full merit standard. I think it is very peculiar that the Opposition, who are always happy to go to court to obstruct the Government at any opportunity—to obstruct the Government in carrying out the will of the British people, or to obstruct the Government when decisions are made by accountable Ministers—want unaccountable, unelected bureaucrats to have arbitrary power, which I do not want them to have. I want them to be able to operate according to merits.

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[Saqib Bhatti]

My hon. Friend makes an important point that is a matter for wider discussions on accountability. I am happy to have that discussion with him in future. As things currently stand, there are sufficient balances and checks in place, but I am always open to having further discussions with him.

[Grahame Morris]

Could the Minister give some clarification on my point about fair reimbursement to the journalists and publishing houses that produce original content? As the new Minister, is he prepared to meet the National Union of Journalists to hear its concerns directly?

[Saqib Bhatti]

If the hon. Member will be ever so patient, I will address that point, because it is important.

My right hon. and learned Friend the Member for South Swindon talked about the DMU’s ex-ante powers, which I want to address because it is an important measure. We proposed to give the DMU ex-ante powers to impose obligations on designated firms because of the characteristics of digital markets, which make them particularly fast-moving and likely to tip in favour of new, powerful winners. We do not think that approach is appropriate for firms in other markets that do not exhibit the same qualities. Even if a firm meets the turnover conditions and carries out a digital activity, the DMU will still need to find evidence that the firm has substantial and entrenched market power, as well as a position of strategic significance in the activity, to designate the firm. The DMU will prioritise the areas where there will be greatest benefits for markets and consumers, and will reflect the CMA’s strategic steer provided by the Government, which is designed to reflect the policy as intended.