A UK financial market watchdog has launched an investigation into the effects of Big Tech in retail finance as analysts predict more regulatory crackdowns on the titans of Silicon Valley.
The Financial Conduct Authority (FCA) is asking consumers, firms and other regulators to voice their insights into what Big Tech’s entry into retail finance services has meant for them, including both potential risks and benefits. The probe will particularly focus on payments, deposit taking, insurance and consumer credit.
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“In recent years, Big Tech’s entry into financial services, in the UK and elsewhere, has demonstrated their potential to disrupt established markets, drive innovation and reduce costs for consumers,” said Sheldon Mills, executive director of consumers and competition at the FCA.
Laura Petrone, principal analyst at GlobalData, tells Verdict that she believes the probe is part of a bigger regulatory push to reel in the powers of Big Tech.
“Financial regulators like the FCA are looking at these platforms’ ability to achieve dominant positions by taking advantage of network effects and the knowledge and data generated in other sectors,” Petrone says.
“From a competition perspective, techniques used by Big Tech to abuse a dominant position and harm consumers and other participants in the market are difficult to detect and prove.”
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By GlobalDataPetrone adds that she expects “increased level of collaboration from regulators across different sectors – for example, in the UK among the FCA, CMA, and ICO – [which] will be fundamental in establishing common principles and a framework to tackle digital platforms issues, not only on antitrust but also data privacy.”
The FCA wants to use the probe to inform its “pro-competitive approach to digital markets” in the UK and improve value for consumers as part of its 2022/23 business plan.
The news comes just days after social media giant Meta was forced to sell GIF library Giphy after the CMA had deemed that the 2020 acquisition suppressed competition. It’s the first time a UK regulator had stepped in to tear up an already completed deal.
GlobalData is the parent company of Verdict and its sister publications.
