Britain’s financial regulator has warned that Big Tech’s growing interest in payments, loans and other financial products could harm competition and put traditional providers at a disadvantage.

The Financial Conduct Authority is launching an investigation into retail financial services initiatives by Apple, Amazon, Google and Meta, Facebook’s parent company, this week. He asks Big Tech companies, their partners and potential rivals for their views on Silicon Valley’s expansion into payments, deposits, credit and insurance.

While acknowledging that consumers can benefit in the short term, the FCA suggests that big tech companies may be able to “leverage their ecosystems” and big data stores to “lock in consumers,” as on other markets where they are already subject to regulatory scrutiny, such as as mobile app stores.

All four companies hold FCA licenses for payment processing in the UK and their pace of expansion into financial products appears to be accelerating. Amazon launched a new insurance portal in the UK last week, while Apple’s acquisition of London fintech start-up Credit Kudos earlier this year was seen as bolstering its push into payments and lending. to consumption.

Sheldon Mills, the FCA’s executive director of consumer and competition, told the Financial Times that the regulator is “looking ahead” in anticipation of tech companies expanding their presence in the UK financial services market, although some new products – such as Apple’s credit card and new high-yield bank account – are currently only available in the United States.

“We think it’s important given the scale, given the large reserves of capital that some of these companies might have to support entry, that we start to understand how competition might develop in our markets.” , Mills said.

In a market analysis released Tuesday, which the agency said was intended to “stimulate discussion,” the FCA said that in the short term, Big Tech’s entry could bring efficiencies or lower costs. prices, as well as opening up access to the underserved. by existing suppliers. New competition from US companies could also prompt traditional UK financial services firms to adopt digital technologies more quickly.

But, in the longer term, the risks are significant, the FCA suggested.

“Based on evidence from Big Tech companies’ core markets and their expanding ecosystems, there are competitive risks arising from their rapid market share gains, markets ’tilting’ in their favor, and potential exploitation market power,” the FCA wrote in its 61-page analysis. “This could be detrimental to competition and consumer bottom lines.”

The relationship between technology companies and traditional banks is often a difficult one, where allies can quickly become rivals.

Tech companies often partner with traditional financial services companies when launching a new product, as Amazon did with a trio of home insurance companies. But given their scale, user base and data, they could then look to launch their own internal services, the FCA said. Apple’s upcoming “Buy Now Pay Later” service will offer short-term loans to consumers through a wholly-owned subsidiary, rather than through Goldman Sachs, with which it partners for credit cards and deposit accounts.

The FCA also suggested that tech companies share their valuable customer data with traditional vendors.

“We would be concerned if the data could be used exclusively by Big Tech companies, which are also able to impose data access restrictions on incumbent suppliers or potential entrants,” the FCA wrote. “Big tech companies’ access to unparalleled data and the ability to combine data across their ecosystems gives them a unique competitive advantage that incumbents and fintechs don’t have.”

No regulatory changes are proposed “at this stage”. Responses to the FCA can be submitted until January 15, 2023, and the agency plans to issue a feedback statement in the second half of next year.

Apple, Amazon, Google and Meta declined to comment on FCA’s comments and market research.