FCA kickstarts discussion on Big Tech’s impact on competition
The UK’s Financial Conduct Authority (FCA) has tendered a discussion around the impact of Big Tech firms on competition within the UK’s financial services sector.
FCA launches discussion around impact on market competition by Big Tech
The regulator says Big Tech firms, usually referring to Facebook (Meta), Google (Alphabet), Apple and Amazon, have seen their presence in UK financial services markets grow in recent years, and they have the potential to change market outcomes quickly.
Kickstarting the discussion, the FCA has published analysis focusing on Big Tech’s entry in four “vital” retail sectors: payments, deposit taking, consumer credit and insurance.
The analysis highlights five key themes emerging across the four retail sectors: the potential for Big Tech firms to enhance the value of their ecosystems; a partnership model is likely to continue the dominant entry strategy for Big Tech firms; Big Tech firms’ entry may not be “sequential or predictable”; Big Tech firms’ entry in financial services could benefit many consumers; and that there is a risk that the competition benefits from Big Tech’s entry in financial services could be eroded if these firms can create and exploit entrenched market power.
While no regulatory changes are being proposed, the FCA says Big Tech firms could pose competition risks if they rapidly gain market share, and they are able to exploit market power.
The consultation forms part of the UK’s wider pro-competitive regime for digital markets, as the FCA looks to develop its future approach to Big Tech as part of its commitment to shape digital markets.
The FCA’s executive director of consumers and competition, Sheldon Mills, says: “Big Tech’s entry into financial services has demonstrated their potential to disrupt established markets, drive innovation and reduce costs for consumers.
“We want to make sure that these benefits are fully realised while, at the same time, ensuring good consumer and market outcomes.”
The FCA is inviting responses to its analysis by 15 January 2023.
