When the UK left the European Union, Brexit leaders promised to promote a free-market, tech-friendly environment. Instead, they have toughened regulations.

First came the Online Safety Bill. It allows the UK government to demand that online platforms break encryption and search through photos, files, and messages to find illegal content, imposing stiff fines for companies that don’t comply — including criminal penalties. Second came an update to the Investigatory Powers Act, which would compel companies to inform the UK’s Home Office about changes to security features before they are released, and to disable those updates or features deemed to hinder investigations.

Now comes a new Competition and Consumers Bill. It enjoys bipartisan support and Parliament looks set to approve it within weeks. The bill empowers a new Digital Markets Unit to identify and impose obligations of big tech companies ex-ante, before they cause consumer or competitive harm. The Digital Markets Unit says it will reduce its focus on consumer welfare and concentrate instead on market power, targeting the largest companies — in a sense, penalizing them for their success.

British regulators would enjoy powers far beyond US and European trustbusters. In the US, the regulators must prove their case in court before imposing remedies. In the UK, judicial review will be restricted. In Europe, regulators are limited to enforcing the detailed proscriptions imposed by the Digital Markets Act. In the UK, they will be free to question and prohibit anything in order to “tackle market power.”

Fierce lobbying from tech companies has brought some changes. After Signal and WhatsApp threatened to pull out of the UK over clauses in the Online Safety Bill that could break encryption, the authorities backtracked and said the requirement would only be enforced once technically possible — something not feasible in the foreseeable future.

On antitrust, a major tussle came over the issue of judicial review. Originally, decisions by the Digital Markets Unit would be subject only to judicial review, not a stronger so-called “merit” review. Under an amendment in November, merit reviews are allowed for appeals on the amount of fines. Another amendment required that a proposed penalty be “proportionate” to the amount of consumer harm.

Defenders of the UK approach say it provides regulators with much-needed flexibility. The US approach is too weak and time-consuming. The European approach is too rigid, requiring big changes to the business models of large Amerc companies. In comparison, the UK still can live up to its tech-friendly promises by enforcing the new rules in a soft-touch business-friendly way.

But critics say the UK approach promises overregulation. Even before receiving their new powers, the UK antitrust regulators overstepped. They blocked Microsoft’s proposed takeover of game maker Activision. When both the EU and the US disagreed and approved the deal, and UK courts expressed reserves, the UK competition authorities were forced to make an embarrassing U-turn.

The botched merger review could be part of a trend. UK regulators can move fast. Already they have opened reviews about Microsoft’s planned investment in Open AI and Amazon’s proposed investment in AI startup Anthropic. If they take action, but the US and EU disagree, the Brits could be forced once again to backtrack.

The moves reflect a potential disconnect between the UK’s tech-friendly ambitions and its limited size and power. London has unveiled plans to boost the country’s semiconductor industry and its quantum computing efforts. And yet, while both the EU and the US have poured billions of euros and dollars into chips programs, little public funding is available for UK semiconductors or quantum.

Although ambitions always confront reality and budgetary restraints limit room for pouring public funds into tech, the UK policy seems to suffer from schizophrenia. The UK’s diminishing geopolitical sway prevents it from exerting a third path independent of the EU and the US. As the volte-face on the Microsoft-Activision deal shows, London must fall in line with Washington and Brussels.

Politics will not bring a likely change. The House of Lords, which argued to tone down the Online Safety Bill, gave a green light to the new antitrust regime. Little public or political debate focuses on the new tech laws, with the potential exception of support to break encryption to bolster child safety.  

Elections loom. Although the present conservative government is likely to lose, the opposition Labor Party shares most of its positions on tech. Post-Brexit UK may want to be a tech superstar. Instead, it looks like continuing to struggle to find a true third voice between the US and EU.

Bill Echikson is a non-resident CEPA Senior Fellow and editor of Bandwidth.

Clara Riedensteing contributed research.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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