The UK government’s regulatory pursuit of big tech companies has been reportedly abandoned after reports that it will not provide legislation that gives the Digital Markets Unit (DMU) powers.

The government’s new legislative programme, set to be announced on 10 May in the Queen’s Speech, is not expected to include a bill that provides statutory powers to the DMU, according to a report from the Financial Times.

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Without this legislation, the tech regulator, housed in the Competition and Markets Authority (CMA), won’t be able to set any rules for leading tech firms and impose fines on them for breaking those rules.

The CMA proposed a DMU in late 2020 to create a legally binding code of conduct to regulate digital giants. It was launched in April 2021 and was charged with specifically examining the role that big tech firms play in business and society. The DMU was set to first operate without any statutory powers, but the government hoped to bring in new legislation to grant the unit a set of full powers over the months following its creation.

A few months later, the government suggested the new powers the DMU will have included the authority to issue fines of up to 10% of a company’s annual turnover. These powers were part of a proposal to help British startups compete against tech giants that dominate the market. 

“Our pro-competition regime will change the conduct of the most powerful tech firms and protect the businesses and consumers who rely on them right across the economy,” a spokesperson from the DCMS told IT Pro. “We will be responding to our consultation shortly. We cannot comment on timelines for potential future legislation.”

The CMA declined to comment.

“The news that the government isn’t intending to strengthen the work of the CMA makes no sense,” Heather Burns, head of policy and governance at the privacy-focused network Maidsafe, said to IT Pro. “The CMA has a proven track record of addressing a whole range of issues, including data abuses and algorithmic transparency, which are particular to that suite of big tech companies which form the government’s myopic tech policy focus.”

Burns added that as a small tech company, Maidsafe is bracing for the full impact of the Online Safety Bill, which will regulate the startups as if it is a big tech company committing big tech-sized abuses. 

“So in failing to strengthen the CMA’s work while simultaneously pressing forward with the Online Safety Bill, the government is doing nothing to address the biggest problems at the point of their biggest impact with one hand, while creating a hell of a lot of new problems for everyone else with the other hand,” Burns emphasised.

The government had previously claimed that the rising concentration of market power among tech giants was stifling competition, which is why it wanted to establish a DMU.

“In a digital economy characterised by a few companies in dominant positions, these companies have been able to impose terms and conditions that exploit our data,” Tomaso Falchetta, global policy lead of Privacy International, explained to IT Pro. “That is why we believe that regulation and enforcement actions are crucial to support competition, innovation and the respect of privacy.”