Google, Fb may face large fines below new UK competitors guidelines

This photo, taken on September 28, 2017, shows a smartphone operated in front of GAFA logos (abbreviation for Google, Apple, Facebook and Amazon web giants) as a background in Hédé-Bazouges, western France.

Damien Meyer | AFP | Getty Images

LONDON – The British antitrust watchdog threatened heavy fines on Tuesday against large technology companies if they violate new competition rules.

Google, Facebook and other companies with “strategic market status” could expect fines of up to 10% of their worldwide sales due to new proposals from the Competition and Market Supervision Authority (CMA).

Based on full-year 2019 results, that could mean a fine of $ 16.2 billion for Google and $ 7.1 billion for Facebook.

The UK government recently announced plans to create a new Digital Markets Unit (DMU) within the CMA to study companies with “entrenched market power”.

The Department of Digital, Culture, Media and Sport (DCMS) said some of the world’s largest technology companies may need to be more transparent about the services they provide and how consumer data is used.

They could also be forced to give consumers a choice of whether to accept personalized advertising and not be able to impose restrictions that make it difficult for users to access competing services.

The CMA made recommendations to the UK government on Tuesday. This includes a legally binding code of conduct that is tailored to each company to “manage the effects of market power”.

The regulator also wants the opportunity to scrutinize mergers and acquisitions involving technology giants “given the particular risks and potential consumer harm that these transactions entail.”

“We propose that the DMU can impose fines up to a maximum of 10% of global sales,” said the CMA.

“We believe this penalty level is sufficient to create a deterrent and to be commensurate with the fines imposed in antitrust cases and other regulators.”

Ronan Harris, Google UK and Ireland vice president, said Internet search welcomes “rules that support growth and innovation”.

“We look forward to working constructively with the Digital Markets Unit and other UK regulators on evidence-based and forward-looking traffic rules,” he said in a statement emailed to CNBC.

A Facebook spokesperson said the company “recognized the need for proper competition rules in the UK that support innovation, competition and the protection of consumer protection”.

“We look forward to studying the Task Force’s recommendations and speaking with the UK government about what they will mean in practice,” added the spokesman.

The new regime will require government legislation, and it could take some time to pass such legislation.

The CMA’s recommendations come just a week before the European Union sets its own rules for digital markets and services.

Large technology companies around the world are also subject to strict antitrust controls. The U.S. Department of Justice has been following a comprehensive review of digital platforms for over a year and most recently filed an antitrust lawsuit against Google.

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