Labour has had a complex relationship with Big Tech since it took power last year.
There have been a few dustups, most recently when the Home Office demanded Apple include a backdoor into its encryption for the sake of “national security”.
But despite the occasional row, the messaging from the incumbents seems to be that if Big Tech can be considered a source of revenue in the country, it is best not to upset them too often.
So, what if it turned out these technological behemoths were costing the country billions?
As economist and former Greek finance minister Yanis Varoufakis describes in his 2023 book Technofeudalism, at times the behaviour of Big Tech has been more akin to medieval overlords demanding rents from the serfdom with little to no accountability.
Perhaps one of the most glaring examples of this is the dominance held by Apple and Google in the app store market.
If you are a developer looking to release an app, there are two main options, the App Store and the Google Play Store, both of which charge a 30% commission on in-app purchases. Developers must also accept strict terms regarding intellectual property.
The Institute for Public Policy Research (IPPR) recently released a report outlining just how much the two tech giants’ control of the app industry is costing UK developers. The headline figure was a £1.4bn annual loss due to steep commission terms from app stores. The report warned this figure could rise to £3.3bn annually by the end of parliament.
The IPPR has therefore called for an enhanced competition watchdog to tackle the app store duopoly.
“Enforcing the UK’s competition rules isn’t anti-business – it’s a pro-business, pro-worker, pro-growth agenda,” said IPPR associate director for economic policy Dr George Dibb.
“If we weaken those rules, we are letting dominant firms and tech giants hold back innovation and investment. That’s money being extracted from British businesses and workers, and funnelled to monopolistic firms, often overseas.”
It is also an issue the Competition and Markets Authority (CMA) has been looking into, however, there are concerns from those in favour of stronger regulation that the government’s pro-growth agenda may obstruct progress.
In January, it was announced that Marcus Bokkerink would be stepping down as chair of the CMA, following disagreements with ministers about the watchdog’s role in supporting growth.
Former Amazon UK manager and president of Amazon China Doug Gurr was brought in, on an interim basis, which for many signalled an alignment with Big Tech.
Among those concerned is former CMA chair, Lord Andrew Tyrie.
“Competition is the lifeblood of free enterprise and healthy businesses. We don’t have enough of it,” Tyrie said.
“The UK’s competition authorities have failed to prevent rising concentration and declining competition in many markets, as have competition authorities in many other jurisdictions.”
The government is admittedly in a difficult situation. Making demands of a company with a market cap roughly the same size as the UK’s GDP is much easier said than done.
There is a balance required of two competing priorities; scaling the domestic tech ecosystem whilst staying on good terms – and securing investment – from the biggest US tech players. It is clear who misses out if the balance tilts.
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