Digital Markets, Competition and Consumers Bill

Viscount Colville of Culross Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

Finally, the amendment also requires the Secretary of State to conduct a review in order to ascertain whether there are any other types of claim that might be appropriate for collective proceedings. No response has been given to that proposal, which I suggest is also eminently reasonable.

[Viscount Colville of Culross (CB)]

I have added my name to the Minister’s Amendment 1 with great pleasure, because the Government agree that the power in Clause 6 is one the Secretary of State does not need. I have also added my name to Amendment 56 as it aims to curtail an even greater Secretary of State power. In Committee, I tabled a series of amendments to limit the Secretary of State’s powers over various stages of the Part 1 conduct requirement process. At the time, we were told that these powers were needed to ensure that the regime could respond to the fast evolution and unpredictability of digital markets. I grateful to the Minister for changing his mind on one of these powers in Clause 6 and for tabling the amendment to leave out subsections (2) and (3), which, even with the affirmative procedure, were going to give the Secretary of State unnecessary powers. It is a sensible move, as the criteria for deciding whether a digital activity should be deemed of strategic significance are, as he said, broad and well set out in subsection (1).

My concern was that the powerful tech companies, whose market dominance will be investigated in the Part 1 process, might put pressure on Ministers to amend the four criteria in Clause 6 to dilute the range of company activities under consideration for SMS positions. I am satisfied that this amendment will stop that happening. I hope that the Minister will now listen favourably to other amendments, which will be debated today, to ensure that the conduct requirement process is as swift as possible and that the Secretary of State does not have overmighty powers to intervene in the process.

I am grateful to the noble Lord, Lord Lansley, for tabling Amendment 56, to which I have added my name, to Clause 114. Subsection (4)(a) as it stands gives too much power to the Secretary of State to approve these guidelines. As I said in Committee, it was pointed out that the guidelines are the most important part of the SMS process. They set out the framework for the conduct requirement process and allow implementation of the new powers the Bill gives to the CMA to examine market-dominant activities by big tech companies.

One of the reasons for my fear of the Minister’s powers is that she might be subject to lobbying by tech companies, as the noble Baroness, Lady Stowell, pointed out, either to change the guidelines or to slow down implementation. At the moment, the Secretary of State has the power to delay approval indefinitely, and, looking to the future, when the guidelines need to be updated or revised, she or her successor could do the same thing. I am grateful to the Minister and his officials for meeting me twice to talk about this issue. I appreciate his time and attention, but I am disappointed that he and the Bill team felt unable to do anything to fetter the Secretary of State’s powers with a time limit on delay for approval. The Minister feels that a time limit would make the process brittle, and fears that an election or some big political event could cause the process to time out. I ask noble Lords to bear in mind that the amendment deals with the Secretary of State’s powers of approval of the guidelines only, not the entire procedure for setting up the guidelines. If there were an election, ministerial work would stop. However, once the new Government were in place, the time limit could kick in and start again. The Secretary of State could then approve the guidelines in 40 days or send them back to the CMA with reasons.

In my meeting with the Minister, he kindly offered to publish letters exchanged between the Secretary of State and the CMA as the guidelines were created. This seemed a wonderful offer that would go far towards ensuring transparency in the process and allay fears of backstage lobbying, and go some way towards assuaging Members’ concerns about the process of creating guidelines. Unfortunately, the Minister rescinded that offer. I ask him in the name of the openness and transparency of the Part 1 process to reinstate it.

Such a move would complement the second part of Amendment 56, whereby if the Minister does not approve of the guidelines—which would surely be the only reason for delay—an open statement of reasons as to why the guidelines could not be approved would be published. Surely noble Lords agree that transparency in the guidelines process would go far in calming any fears of it being influenced by the big tech companies.

I want very much to see this Bill on the statue book, but the Secretary of State’s powers in Clause 114 are detrimental to the Part 1 process and need to be looked at again. I hope the Minister will accept Amendment 56. If not, I will support the noble Lord, Lord Lansley, should he decide to test the opinion of the House.

[Lord Black of Brentwood (Con)]

My Lords, I declare my interest as deputy chair of the Telegraph Media Group and my other interests as set out in the register. I will focus briefly on three crucial amendments in this group—on proportionality, the appeals standard, and the Secretary of State’s powers—echoing points that have already been made strongly in this debate.

I fully support Amendments 13 and 35 in the name of the noble Lord, Lord Faulks. The amendment made to the Bill in the Commons replacing “appropriate” with “proportionate” will significantly expand the scope for SMS firms to appeal the CMA’s decision to create conduct requirements and initiate pro-competitive interventions.

As we have already heard, the Government have sought to argue that, even absent the “proportionality” wording, in most cases the SMS firms will be able to argue that their ECHR rights will be engaged, therefore allowing them to appeal on the basis of proportionality. The question arises: why then introduce the “proportionality” standard for intervention at all, particularly when the CMA has never had the scope to act disproportionately at law?

In this context, it is clear that the main potential impact of the Bill as it now stands is that a court may believe that Parliament was seeking to create a new, heightened standard of judicial review. As the Government have rightly chosen to retain judicial review as the standard of appeals for regulatory decisions in Part 1, they should ensure that this decision is not undermined by giving big tech the scope to launch expensive, lengthy legal cases. All experience suggests that that is exactly what would happen by it arguing that the Government have sought to create a new, expansive iteration of JR. I fear that, if the amendments from the noble Lord, Lord Faulks, are not adopted, we may find in a few years’ time that we introduced full merits reviews by the back door, totally undermining the purpose of this Act.

Amendments 43, 44, 46, 51 and 52 in the name of the noble Baroness, Lady Jones, are also concerned with ensuring that we do not allow full merits appeals to undermine the CMA’s ability to regulate fast-moving digital markets. Even though full merits are confined to penalty decisions, financial penalties are, after all, as we have heard, the ultimate incentive to comply with the CMA’s requirements. We know that the Government want this to be a collaborative regime but, without there being a real prospect of meaningful financial penalties, an SMS firm will have little reason to engage with the CMA. Therefore, there seems little logic in making it easier for SMS firms to delay and frustrate the imposition of penalties.

There is also a danger that full merits appeals of penalty decisions will bleed back into regulatory decisions. The giant tech platforms will undoubtedly seek to argue that a finding of a breach of a conduct requirement, and the CMA’s consideration that an undertaking has failed to comply with a conduct requirement when issuing a penalty, are both fundamentally concerned with the same decision: “the imposition” of a penalty, with the common factor being a finding that a conduct requirement has been breached. The cleanest way to deal with this is to reinstate the merits appeals for all digital markets decisions. That is why, if the noble Baroness, Lady Jones, presses her amendments, I will support them.

Finally, I strongly support Amendment 56 in the name of my noble friend Lord Lansley, which would ensure that the Secretary of State must approve CMA guidance within a 40-day deadline. This would allow the Government to retain oversight of the pro-competition regime’s operations, while also ensuring that the operationalisation of the regime is not unduly delayed. It will also be important in ensuring that updates to the guidance are made promptly; such updates are bound to be necessary to iron out unforeseen snags or to react to rapidly developing digital markets. Absent a deadline for approval, there is a possibility that the regulation of big tech firms will grind to a halt mid-stream. That would be a disaster for a sector in which new technologies and business models are developed almost daily. I strongly support my noble friend and will back him if he presses his amendment to a vote.

With the deadline to comply with the Digital Markets Act in Europe passing only last week, big tech’s machinations in the EU have provided us with a window into our future if we do not make this legislation watertight. As one noble Lord said in Committee—I think it was the noble Lord, Lord Tyrie—we do not need a crystal ball when we can read the book. We have the book, and we do not like what we see in it. We must ensure that firms with an incredibly valuable monopoly to defend and limitless legal budgets with which to do so are not able to evade compliance in our own pro-competition regime.

Digital Markets, Competition and Consumers Bill

Viscount Colville of Culross Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

None of the amendments that I have put forward would in any way dilute the protection for customers that we all want to see but they would protect British businesses, particularly in the vital creative economy, which we all want to see grow and prosper. If the issues that I have raised are not to be remedied here in Committee, I encourage the Government to commit to looking further into this issue as we approach Report. I beg to move.

[Viscount Colville of Culross (CB)]

My Lords, I tabled Amendment 190, and I thank the noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Clement-Jones, for adding their names to it. I also thank Professor Christian Twigg-Flesner from the University of Warwick for his help in creating this amendment.

Clause 259 sets out the obligations of a trader when a consumer is entitled to cancel or bring a subscription contract to an end. They are limited to providing various types of notice and dealing with potential overpayments by the consumer. Many subscription contracts relate to all digital content. These will involve the provision of both personal and non-personal data under the contract. On ending the contract for a digital service, there needs to be clarity about what should happen to all the subscriber’s data.

The whole point of this amendment is that it lays duties on a trader, on the cancellation or end of a subscription contract, to ensure that the consumer gets all their data back, not just that narrowly defined as personal data. At the moment, only personal data is covered under the UK GDPR. This is defined very narrowly in Article 4. “Personal data” is defined as only

“information relating to an identified or identifiable natural person … an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier”.

Under Article 20, which covers the right of portability of data, the user can end a contract, which is tantamount to withdrawing their consent for the continuing processing of personal data. It ensures that the trader cannot use this personal data any more. Article 17 provides the consumer with the right to have the personal data erased after exercising the Article 20 portability right to download their personal data. Personal data, therefore, as narrowly defined, is well protected under the law at the end of a subscription.

However, the consumer might have a lot of other data that is not within the narrow definition of “personal data”. This is non-personal data. There is no provision under UK consumer law that deals with non-personal data following the end of a contract. This would have been covered by the 2019 EU directive on digital content and digital services, in Article 16, but that came into force only on 1 January 2022, long after the UK had left the EU.

Amendment 190 will deal with the absence of protection for non-personal data in English law. It will give the user control over all their data, both personal and non-personal. Proposed new subsection (7) protects all the consumer’s data created under the contract. This covers both personal and non-personal data. Proposed new subsection (8) allows for all this data to be returned to a user within a “reasonable period” after the end of the contract. Proposed new subsection (9) gives a balance to these consumer rights by creating exemptions for the trader to have to return the data, especially if it is part of a bigger dataset that cannot be easily separated out. Proposed new subsection (10) is particularly important, because it prevents the trader continuing to use the consumer’s non-personal data at the end of the contract.

As I have explained, “personal data” is very narrowly defined. This leaves a mass of data created by the consumer during the contract that will need to be protected at the end of the contract. It will be if this amendment is adopted. Surely, the Minister would want the trader to return all the digital data that the consumer created on the platform, and to prevent the trader continuing to exploit it for financial gain.

To give noble Lords an example of the dangers to consumers if this amendment is not adopted, a consumer might want to end their subscription to their account at Flickr, the photo-sharing platform. At the moment, the clause will ensure that all the photos that identify the user will be regarded as personal data and returned to them. However, it might well not cover all the other photos that do not directly identify them. They could be holiday pictures of beaches in Greece, historic buildings or wildlife that they placed on the Flickr platform during their contract.

Once the contract is finished, Flickr can currently keep all the other photographs that the consumer has taken and refuse to return them. Furthermore, it can use them for financial gain. Likewise, a user’s comments placed against somebody else’s photos can be retained on the site by the trader after the end of the contract. On Flickr, the original author’s name is changed to a randomly chosen two-word alternative. However, the comments can be detailed and the consumer might well want to retrieve them, but they currently will not be able to.

Digital Markets, Competition and Consumers Bill

Viscount Colville of Culross Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

Moved by

[Viscount Colville of Culross]

76: Clause 114, page 70, line 37, leave out paragraph (b)
Member's explanatory statement
This amendment removes the requirement for the CMA to obtain approval from the Secretary of State before publishing its guidance outlining how it will exercise its functions.

[Viscount Colville of Culross (CB)]

My Lords, I have asked for my Amendment 76 to Clause 114 to be decoupled, because I think it goes to the centre of the operation of Part 1 and I want noble Lords to focus on debating the issues raised by this clause as it stands. I also thank the noble Baroness, Lady Jones of Whitchurch, and the noble Lords, Lord Black and Lord Holmes, for putting their names to this amendment. I am glad that Amendment 77 in the name of the noble Baroness, Lady Stowell, is also in this group; I support its aims. Clause 114 seems to be a small section hidden away on page 70 of the Bill, yet the guidance process that it outlines is fundamental to the operation of the regime set out in Part 1 of the Bill.

This is a high-level Bill, which leaves a lot of fine-tuning and detail to the CMA. It will be the first part of the process to become operational after Royal Assent has been granted. Without these guidelines, the CMA will not be able to start its urgently needed investigations into the activities of large tech companies and their domination of many digital markets.

--- Later in debate ---

[Viscount Camrose (Con)]

I am happy to look into that as a mechanism, but, as currently set out in the Bill, the logic is that the Secretary of State can approve the guidance.

The Government will continue to work closely with the CMA, as they have throughout the drafting of the Bill, to ensure that the timely publication of guidance is not disrupted by this measure. Published guidance is required for the regime to be active, and the Government are committed to ensuring that this happens as soon as possible. Guidance will be published in good time before the regime goes live, to allow affected stakeholders to prepare. The Government hope that, subject to parliamentary time and receipt of Royal Assent, the regime will be in force for the common commencement date in October this year.

In response to my noble friend Lord Black’s question about guidance and purdah, the essential business of government can continue during purdah. The CMA’s guidance relates to the CMA’s intentions towards the operation of the regime, rather than to a highly political matter. However, the position would need to be confirmed with the propriety and ethics team in the Cabinet Office at the appropriate time, should the situation arise that we were in a pre-election period.

I thank the noble Viscount, Lord Colville, and my noble friend Lady Stowell for their amendments, and I hope that this will go some way towards reassuring them that the Government’s role in the production of guidance is proportionate and appropriate. As I said, I recognise the grave seriousness of the powerful arguments being raised, and I look forward to continuing to speak with them.

[Viscount Colville of Culross (CB)]

I thank noble Lords for their contributions and ask the Minister to listen to the concerns Members have expressed today. The clause gives extraordinary power to the Secretary of State, and I ask the Minister to listen to his noble friends, the noble Baronesses, Lady Stowell and Lady Harding, who called the power dangerous. In particular, the noble Baroness, Lady Harding, said that it was so dangerous and such a big power that it must be a distraction.

The noble Lord, Lord Black, said that the concern about having this power is that it would create a delay, and that that would especially be a concern over the period of the election, both before and after. He called for draft guidance to be approved within 31 days, which is certainly something that could be considered; after all, no one wants ping-pong to go back and forth do they? They want the CMA’s guidance to be put into action and this process to start as soon as possible.

The noble Baroness, Lady Kidron, said that the asymmetric power between the regulators and the tech companies means that there will be a drum beat of what she called “participative arrangements”. That is quite a complex thought, but the idea behind it—that the CMA must not be stopped from using its power to deal with some of the most powerful companies in the world—is very important.

The noble Baroness, Lady Stowell, is a former regulator and called for Parliament to have a role in overseeing this. We were reminded by both the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Kidron, that we had a discussion on Secretary of State powers in the debate on the Online Safety Act, much of which was about whether a joint digital committee could oversee digital regulation. I suspect that that will be discussed in the next group. We have given enormous powers to Ofcom with the Online Safety Act, we are giving big powers to the CMA and I imagine that we are giving big powers to the ICO in the Data Protection Act, so Parliament should have a powerful standing role in dealing with that.

The Minister called for robust oversight of the CMA and said that it must be accountable before Parliament. Already, Parliament looks at its review and annual reporting. I come back to the concern that the Secretary of State still has powers that are far too great over the implementation of this guidance, and that the CMA’s independence will be impinged on. I repeat what I and other noble Lords said on the concern about Clause 114: it stands to reduce the CMA’s independence. I ask the Minister to consider very seriously what we have been saying.

The Minister’s suggestion that he will look at the affirmative resolution for Secretary of State approval of guidance is something that we should certainly push further—at least that is some step towards reducing Secretary of State powers. With that, I beg leave to withdraw my amendment.

Amendment 76 withdrawn.

Digital Markets, Competition and Consumers Bill

Viscount Colville of Culross Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Viscount Colville of Culross (CB)]

My Lords, I declare an interest as a television producer. I too welcome this Bill, which has been a long time coming.

Five and a half years ago, I had the honour to be a member of the Communications and Digital Committee inquiry into digital advertising in the UK. We heard how the two big tech companies, Facebook and Google, used the combination of their massive databases and near-total control of the supply, intermediary and purchase sides of the digital advertising market to take a more than 80% share. Our inquiry recommended that the CMA conduct a market study as quickly as possible into the digital ad market. Two years later, that market study confirmed the tech companies’ near-complete domination of the market. It concluded that the lack of competition harmed consumers by excessive exploitation of their data and lower quality of service to them and to advertisers.

However, the tech companies’ dominant position in the market has also had a deleterious effect on media advertisers. Publishers of news in particular have suffered from the massive reduction in advertising revenue. In the first half of 2020, while tech platforms’ ad revenue grew, digital advertising fell by 8% for national news brands, by 10.5% for online magazines and by 10% for online regional titles. It is expensive to create original news and, especially, to launch investigative journalism, which is essential to holding those in power to account.

It was therefore not surprising that the Communications and Digital Committee launched an inquiry into the future of journalism in the digital age. Journalism deserves special consideration in this Bill. I say this not just because I am a career journalist but because it plays a role of public value and importance to our society and democracy. It helps people stay informed about the world beyond their personal experience—surely a prerequisite for an active citizen in a democratic society—but it is under threat, especially the provision of local news.

In the digital age, people’s consumption of news has moved dramatically online. Ofcom’s 2021 report showed that 45% of UK adults got their news through social media sites. The number must be much greater now. Much of this is posted by users and viewed on platforms without reference or redirection to the publishers’ websites. The tech companies have their own curated news sites, such as Google’s news showcase and Facebook news, which aggregate news from a wide variety of sites. An article from an extreme magazine can sit alongside FT journalism and the reader be none the wiser. All this is damaging for the brands of the legacy media. Most news publishers have moved online, but the combination of falling advertising revenue and the tech companies’ free use of their news—at best giving minimal remuneration for their provision of it—has led to considerable cost-cutting and redundancy.

There are a few glowing exceptions in America. When Mark Thompson was CEO of the New York Times he invested massively in journalism, and the company is managing to make a profit from digital subscriptions. But to compound the exploitation of media companies, artificial intelligence is also using journalistic content as a free database for training its large language models. An academic paper published recently found that the greatest source of data for OpenAI’s LLMs came from the New York Times. The BBC ranked second, with its content providing 1.6% of the total database, and the Guardian closely followed with 1.5%. This content is so valuable for AI training because the data is of high value and original. Most importantly, it is taken from the publishers by the AI firms for free.

It is not surprising that the exploitation of the media publishers by the tech companies is having a devastating effect. In the last 17 years, more than 271 print titles have gone out of business, and goodness knows how many have become freesheets, sacked their journalists, withdrawn from covering local councils and courts, and mainly publish press releases. Reach plc, one of the biggest publishers of local news, recently announced 450 redundancies, including 320 editorial roles. That was its third round of cuts in 2023 alone, bringing the total number of jobs at risk to more than 1,000. The trend is accelerating.

The power imbalance between tech companies and publishers means that the former are not prepared to move much to reduce their dominance of the digital ad market, provide proportionate remuneration for the use of journalistic content or give publishers more control over how their content is used and provenanced. So I greatly welcome the final offer mechanism and the conduct requirement process set up in the Bill. The threat of the final arbitration by the regulator of two offers of remuneration is obviously a backstop, and I know that His Majesty’s Government hope that the CMA will never have to be in a position where it can make this decision.

However, my concern, and that of many people in the media, is that this beautifully thought out and carefully crafted CR process, which gives plenty of opportunity for the designated SMS companies to abide by a code of conduct, could take a year and a half to complete, if not longer, whereas in Australia it takes six months to come to arbitration. Meanwhile, many small publishers, which are already on the edge financially, will not be able to wait that long.

My fear is that the tech companies have so much to gain from the present situation that they will act in bad faith. In Canada, the Government estimated that the value of news content to Google was 300 million Canadian dollars. However, after exhaustive negotiations it ended up paying just 76 million Canadian dollars. I too ask the Minister to consider whether Clause 38(3), when the SMS company has breached an enforcement order, could be a more effective point in the process at which to pressurise the two sides to agree fair terms.

Like the noble Lords on the Front Bench, I am worried about the introduction of the Clause 29 countervailing benefits, which were inserted at the last minute before the Bill went to the other place. I imagine it was done at the instigation of tech company lobbyists, who will use it to delay the CR process yet further. In the other place, the well-established definition of “indispensable benefit”, set out in the Competition Act 1998 and tested through the courts, has been thrown out. The Bill now has a new definition of benefit. Thresholds are set out in the clause, but the courts will still have to decide what “benefit” now means. Can the Minister explain how that will clarify and speed up the effectiveness of this Bill? The Bill is supposed to be dealing with anti-competitive practices set up by the SMS company, but surely Clause 29 creates an opportunity to give extra lobbying power to companies that already have the most effective and well-paid lobbyists in the world.

I am also worried by Clause 114, on the control that the Secretary of State has over guidance to the CMA in setting up the machinery of the CR process, and then also having power over guidance on setting up an individual SMS process. The noble Baroness, Lady Stowell, fought hard, and with some success, during the passage of the Online Safety Act to try to limit Ministers’ control over Ofcom’s work. Political independence must be the mainstay of a successful regulator. However, this clause as drafted gives the Government endless time and power to send guidance back to the regulator for revision. I am convinced that this will cause unnecessary delays and politicisation of the CR process. At the least, I would like to see a time limit introduced for the Minister to accept CMA guidance proposals.

I am also concerned about powers given to tech companies further down in the Bill, in Part 4. Clause 259 sets out the duties of a trader on the cancellation of a contract, and they focus on providing various types of notices and dealing with potential overpayments by the consumer. Although the retrieval of personal data is covered under the GDPR, there is no provision for the retrieval of non-personal data, which might have been provided to the trader during the subscription period. This could be data about household fuel consumption, cloud-based Word documents, comments on social media or videos uploaded to video-sharing platforms.

The consumer might want the legal right to retrieve their data from the service before the subscription ends. More importantly, the trader might want to keep non-personal data and make it available to other users without the consent of the consumer. In my view, this is an omission that many people would be pleased to have rectified by an amendment to the Bill.

I too share the frustration of the noble Lord, Lord Vaizey, about the difficulty of ending subscriptions. An even more popular option to the Bill would be the introduction of an end-of-contract button labelled “terminate now” on the front page of digital services websites. Often it is hard to find the unsubscribe button on a website. On occasions it has taken me some time to burrow down through the layers of a site to find the unsubscribe button hidden away in a digital corner. German law provides for a compulsory button, which allows the consumer to enter all the essential information needed to end the contract—that would be a benefit to the customer.

This is a huge and complex Bill, and it has been a long time in its gestation. I am very pleased to see our country finally confronting the anti-competitive behaviour of the big digital players and protecting consumers for the long term.