The UK competition regulator has told the government to set up a digital regulator within a year or his agency will take action against Facebook and Google.

Andrea Coscelli, chief executive of the Competition and Markets Authority, told the Financial Times he was preparing to mount investigations into the two internet giants if the government did not act fast enough to curb their powers.

In his clearest statement of intent yet, Mr Coscelli said the watchdog would give the government a year to come up with a regulatory regime for big tech, including a new digital regulator, or he would take action.

It comes after the watchdog attracted criticism for backing away from launching market investigations or antitrust cases into Facebook and Google at the end of a year-long study into the online ad sector in July despite uncovering serious issues. 

The CMA said the dominance of Google and Facebook and the nature of the search and online advertising markets gave them an “unassailable incumbency advantage” that needed to be tackled with new laws.

At the time, the CMA said it would wait until its Digital Markets Taskforce — a group tasked with advising the government — had finished its work at the end of 2020. This week Mr Coscelli said he would give parliament a year to hand down new laws, because of disruption wrought by Covid-19, but set down clear plans for direct intervention.

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“Plan A is to have a regulatory framework,” he said. “If [within a year] there is little action because of Covid-19 and Brexit then we would certainly do something ourselves directly — that is plan B.”

Mr Coscelli said the CMA was considering multiple market investigation references — intensive probes that enable the watchdog to intervene directly in markets — and was discussing potential antitrust cases against internet giants, too, to be run in parallel with the EU.

He said: “Essentially, we found problems with Facebook on social media, Google on search and Google on ad tech, so there are three possible market investigation references.”

He said action would be a “combination of antitrust and market investigation references”.

However, lawyers said new laws were likely to be more effective than the CMA’s tools. In its July report the CMA said the issues it had uncovered were “so wide ranging and self-reinforcing that our existing powers are not sufficient to address them”.

“Ultimately there is a need for regulation because the existing competition tools are second-best unless the CMA attempts something narrow and targeted,” said Christian Ahlborn, competition partner at Linklaters. “Broad investigations into social media and digital advertising would be really ambitious and fraught with risk.”

Mr Coscelli’s statements come as regulators in Brussels are drawing up criteria that would mean up to 20 companies, including Facebook and Google, would be hit by tough new rules aimed at trimming their market power. 

France and the Netherlands have also issued a call for EU competition authorities to take swift action against emerging technology companies.

In the US, regulators are also increasingly seeking to curb the powers of Big Tech. A recent Congressional report said large online platforms had abused their market position and should restructure their businesses.

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