Analysis: Britain appeals to Big Tech with a changing of the regulatory guard

By Paul Sandle, Kate Holton and Andres Gonzalez

LONDON (Reuters) – Britain’s choice of a former Amazon executive to chair its antitrust regulator is a clear case for investment, including in Big Tech, and signals it is willing to make deals easier if it helps , company heads and lawyers. he said

Doug Gurr, former head of the US online retailer’s UK operation, was chosen to chair the Competition and Markets Authority (CMA) after Marcus Bokkerink acknowledged that “it was time to move on”, Finance Minister Rachel Reeves said on Wednesday.

With the economy struggling and pressure on government to improve living standards, Reeves wants regulators to change, believing they have become too risk-averse and prevent businesses from innovating and expanding.

Cristina Caffarra, a competition economist who has provided expert analysis for court cases, said mergers did not increase economic output unless large synergies were reinvested.

But the selection of Gurr as chairman – for the time being on an interim basis – signaled that Britain was moving closer to US regulation in the hope of attracting investment.

“That’s the meaning of it,” he said.

Competition lawyer Dominic Long of A&O Shearman said there could be an increase in cross-border deals for UK assets.

“All things being equal, it will be easier to get potentially problematic deals through now than it would have been, say, 12 months ago,” he said.

Foreign investment is important in Britain, with the government estimating that it created more than 70,000 jobs in the 2023/24 financial year. The projects dropped after Britain’s 2016 vote to leave the European Union, but the country remains close to France as a top European destination.

However, successive governments have faced criticism from unions and some politicians for making it too easy for foreign companies to buy British ones.

MEETING OF EQUATIONS

The CMA had already made changes under Bokkerink after it took on Microsoft in 2023 only to backtrack.

It was the only major regulator to block the $69 billion acquisition of the US tech company by “Call of Duty” maker Activision Blizzard.

But it reversed its decision after an angry Microsoft lobbied the government. The CMA said the spin had not been politically influenced. It did not block any major business in 2024.

A FTSE-100 chief executive, who asked not to be named, said Britain’s new Labor government was trying to rebuild ties with Big Tech after the bruising encounter with Microsoft.

He said that with the new US administration of Donald Trump set to give more leeway to the likes of Meta, Apple, Microsoft, Google and Nvidia, Britain realized it had to do the same.

“Given how the world is going in terms of the size and scale of businesses, maybe we should look at things a little bit differently in the UK,” he said.

“There’s probably a recognition that having more scale is a good thing.”

Martin Sorrell, managing director of advertising group S4 Capital and founder of WPP, said the talk at the World Economic Forum in Davos was that Britain – and Europe – had become over-regulated. “Maybe this is a welcome change in the UK,” he told Reuters.

SUPERIOR LEVEL

The CMA became the top tier of regulators when Britain left the EU in 2020, forcing it to decide whether to align itself with Brussels, which has issued antitrust charges against Microsoft, Apple and others, or adopt an often lighter approach in the United States.

Bokkerink told LinkedIn that he had tried to give consumers choices and allow companies to compete on merit.

Reeves said in Davos on Wednesday that the balance had gone too far in risk regulation.

“You have to be able to protect consumers, but people should also be able to take risks,” he said.

While the CMA said last year it would focus on “truly problematic mergers” and be more open to solutions, it has also stepped up its scrutiny of technology companies in general.

Its Digital Markets Unit is using powers granted this month to investigate Google’s search business and on Thursday launched an investigation into Apple and Google’s smartphone operating systems, app stores and browsers.

The CMA is also investigating cloud services from Amazon, Microsoft and Google.

Google echoed the government’s growth mantra in its defense of its search business, saying digital services such as search would “drive new economic development” in Britain.

The government denied it was pandering to Big Tech.

“I don’t think the characterization of us being in the pocket of Big Tech is accurate at all,” Justin Madders, a junior minister in the business department, told parliament on Wednesday.

Amelia Fletcher, professor of competition policy at Norwich Business School and former non-executive director of the CMA, said she would be “very concerned” if the government weakened the CMA’s ability to regulate digital markets.

“I fear that Big Tech is framing this new regulation as anti-growth, when it is specifically designed to promote growth,” he said.

“It is designed to open up markets to new competition and innovation, and to ensure that businesses using digital platforms can compete effectively.

“I would urge the CMA to stand firm.”

(Writing by Paul Sandle and Kate Holton. Additional reporting by David Milliken, Anousha Sakoui and Amy-Jo Crowley. Editing by Mark Potter)

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