Digital Markets, Competition and Consumers Bill

Lord Fox Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

If this amendment were passed, it would ensure that resources are made available to make happen the kind of committee that we need in Parliament for us to perform the kind of parliamentary oversight that is becoming increasingly needed and urgent. I urge my noble friend the Minister not just to support what is proposed—it is in the Government’s interest to support this—but, as I said on the last group when I did not seem to have much luck, to adopt the amendment as the Government’s own, as they did when the Financial Services and Markets Bill was going through the House. Parliament would then see that this kind of extra responsibility and resource has the full support of the Government. We have to be better equipped to discharge our responsibilities and I hope that this attracts widespread support from the Committee today.

[Lord Fox (LD)]

My Lords, I speak to Amendment 82 in my name. Through the medium of parliamentary reports, it seeks to probe the Government’s position on standards—as was previewed by the noble Lord, Lord Bassam. Why am I interested in standards? My experience of other sectors is that the UK’s approach to engagement in international standards is often—in my case, always—a technical approach. Technical people are sent to the relevant bodies to do the work. This flies in the face of what I have witnessed when other countries, on their own account and that of their national champions, used the process of negotiating new standards to further the strategic aims of their country and its national standards. I want to have this discussion so that I can hear how the Government view this and where the responsibility lies. Without a real handle on standards, competitivity and competition will be playing catch-up.

During the first day in Committee, when I was in the Chamber, your Lordships discussed the importance of interoperability. By my definition, interoperability has to enable both vertical interconnection between systems and horizontal interconnection with the web. The internet is a web of interconnected sites, so interoperability has to be both one to one, for example between servers and systems, and among servers and systems.

During that debate, the Minister, the noble Viscount, Lord Camrose, said that there was no need to define interoperability and that doing so might unhelpfully narrow the definition. That would be true if, when he was speaking, he had covered all types of interoperability, including web interoperability. Separately, he referred to interoperability and data access. This might be helpful if he meant interoperability generically, covering different subsets. Can the Minister clarify whether his department’s definition covers many-to-many, one-to-many and one-to-one interoperability?

To be more technically clear, this would cover interoperability among and between websites, using JavaScript and web data such as URLs, as well as one-to-many interoperability, such as browser interactions with websites, and one-to-one interoperability, such as covering apps and operating systems. At present, the language of Clause 20(3) is limited only to interoperability with a platform, so it would not address abuse by interfering with web interoperability.

This may sound too detailed, but it is deliberately detailed, because the detail of standards establishes who wins commercially. Somebody has to be inside all this to make sure that we can avoid businesses locking out their competitors, because what has happened over the past 20 years is increasing amounts of locking in.

Microsoft tried to use its operating system to lock in its media player app and its browser. Google is locking in online advertisers to its systems. Apple locks in apps through the payments and App Store terms and conditions. Amazon sought to lock people into its buy box. Facebook does not allow people to cross post, and each company runs messaging platforms that work better when plugged together than when plugged in with one of their rivals. Lock-in reinforces the network effect in communications and increases each platform’s separate monopoly. Standards define which software components work with other components, while definitions help to decide which software can work with which. Definitions of what is in the browser and what is elsewhere right across the internet are critical.

As the Committee knows, there are three principal players setting these definitions. What the browser does is overseen by the World Wide Web Consortium—W3C. Other internet standards are defined by the Internet Engineering Task Force—IETF. Telecoms standards are defined by the International Telecommunication Union—ITU, which is part of the UN in Geneva. All are relevant to interoperability and it is critical that the CMA has a role in policing interoperability, not least to ensure that standards are not rigged for the benefit of the bigger players, as I have just illustrated.

The ITU is a public body, but W3C and IETF are run by private entities for their own benefit. There is a serious risk and current concern that the definitions that are vital to avoid the intermediation of the future web are being rigged for the benefit of the big tech players. Promoting interoperability between browsers and websites means that browsers are not websites and do not operate in a way that prefers the website of the browser owners. They should render websites whoever owns the website. Different functions have to be standardised and policed for this to happen. To promote online competition, businesses need to be able to compete with the dominant browser owners. To be clear, Google and Apple own or control browser engines for all Apple, Google and Microsoft devices sold worldwide—essentially, almost everything apart from Chinese systems.

It is central to digital competition that the CMA promotes open and fair interoperability, thereby ensuring that browser owners do not give themselves discriminatory preferences or otherwise use their control over one part of the system to benefit themselves at the expense of their rivals. As we go forward and technology changes, we have an opportunity to nip this in the bud rather than trying to reclaim it in the opposite direction.

I am in danger of labouring this point, but I am going to: wallets offer storage for online payment cards. Someone running a wallet business would expect that the wallet’s operation would be discrete from the browsers. You would expect a browser to operate in a non-discriminatory way, enabling all types of wallets and cards to be used. Well, in 2022, W3C passed a standard that clearly benefits the two dominant browsers by allowing them to prefer their own wallets, casting a shadow across the whole online wallets and payments business world. This happened because Google and Apple play a considerable role in the development of standards for their own benefit. If we actually want an open market, this all needs to be actively policed; I suggest that the CMA has to be central to that policing process. Without this effort, much of the other work of the DMU will be closing empty stables’ doors while chasing bolting horses.

I note that the noble Lord, Lord Lansley, had some interesting things to say about interoperability and data in the previous debate, so I will be interested in his response and those of other noble Lords to this amendment. I of course will not be moving it, but I want a full reply from the Minister and possibly some further dialogue before Report, just to see the department’s view of how the engagement on this highly technical and important issue is to be done at international level. If it is not the CMA, who and how?