UK watchdog draws up plans to stop internet giants like Google swallowing start-ups with potential to become global rivals
- Currently the Competition and Markets Authority rarely intervenes on takeovers
- Wants to step in even if there is only a small chance competition will be harmed
- Concerned tech giants have grown powerful as people spend more time online
Britain’s market watchdog is working on plans that could see Google and other internet giants blocked from gobbling up smaller companies with potential to become global rivals.
At present, the Competition and Markets Authority rarely intervenes on takeovers by tech titans unless there is strong probability that the deal could damage competition.
It now wants to be able to step in even if there is only a modest chance that competition will be harmed years in the future.
The Competition and Markets Authority is concerned the tech giants like Google have grown more powerful as people spend more time online during the pandemic (file photo)
The watchdog, which is lobbying the Government to give it the green light to launch a crackdown, is concerned the tech giants have grown more powerful as people spend more time online during the pandemic.
It has warned that digital giants could take advantage by making more attempts to buy up other tech start-ups.
The CMA is able to intervene in takeovers that affect consumers or businesses in the UK and regularly works with its overseas counterparts to ensure fairness.
Under its planned crackdown, the watchdog could also demand titans such as Google, Facebook and Amazon hand over their business plans when they launch takeover bids for younger rivals.
Mike Walker, chief economic adviser at the CMA, has admitted that watchdogs have previously waved through deals that have damaged competition.
Mike Walker, (pictured) chief economic adviser at the Competition and Markets Authority, has admitted that watchdogs have previously waved through deals that have damaged competition
He cited Facebook buying Instagram for $1 billion (£772.5 million) in 2012 when it had just 13 employees and no revenues and had been running for just two years.
He said the deal was allowed because regulators failed to take into account the potential for Instagram to become a rival to Facebook. Instagram is now worth an estimated $100 billion.
Research for the CMA has found that 60 per cent of firms swallowed by the tech giants over the past decade were four years old or less.