Rishi Sunak’s Government could be about to kill off free trials, a cross-party group in the House of Lords has cautioned. Plans to overhaul the way subscriptions are sold in the UK could become an expensive burden for any company looking to offer a free trial period, the group warned.
Video on-demand platforms, gyms, dating apps, charities, and news publishers have also spoken out about the proposals. The Digital Markets, Competition and Consumers Bill requires companies to offer a 14-day cooling-off period to subscribers. During this fortnight window, subscribers should be able to cancel their payment method “by any means,” the draft legislation adds.
Lord Black of Brentwood, a Tory peer, said the shake-up would allow people to “binge on a specific series or watch a sports event and then withdraw immediately and receive a refund.”
“In effect, therefore, it will make trial periods redundant,” he added.
Spotify is one of a number of music, audiobook, and video subscription services in the UK that currently offer a free trial period for new customers. A cross-party group in the House of Lords has warned these trial periods could be jeopardised by incoming legislation from Rishi Sunak's UK Government
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Government estimates show the changes in the Digital Markets, Competition and Consumers Bill would cost businesses an extra £1.2 billion in the first year alone. An eye-watering 90% of that cost is expected to fall on small- or medium-sized companies, analysis shows.
Streamers like Prime Video, Paramount+, and Apple TV+ currently offer free trials that range from one week to 30 days. Disney+ and Netflix both offered a free trial to drum up interestwhen they first arrived in the UK, but quietly retired the option in the subsequent months.
Spotify, Amazon Music HD, Apple Music, and Audible all offer a free trial to new music and audiobook subscribers, respectively. Sky TV has recently started to offer a one-month free trial for its Sky Stream set-top box too, which replaces traditional satellite dish-powered options.
These free trials could all be at risk if the Digital Markets, Competition and Consumers Bill becomes UK law, the House of Lords has cautioned.
Sky was one of several high-profile companies to speak out against the consultation, lambasting the draft legislation as “too prescriptive”. The broadband and TV firm said the proposals would “add significant costs on to businesses — and by extension, consumers — for marginal consumer gains.”
Lord Vaizey of Didcot, a Tory peer who served as Culture and Communications minister from 2010 to 2016, said businesses would struggle to meet the “cancellation by any means criteria”.
“I christen this amendment the ‘carrier pigeon amendment’. It is drafted in such a way that, in theory, I could cancel my subscription by sending a carrier pigeon and say with a straight face that I had done it authentically,” he bemoaned.
Tina McKenzie, policy chairwoman of the Federation of Small Businesses, said: “Unless the proposals around subscriptions are amended, they could mean new and unwelcome costs for small firms.
“From new software to keep up with renewal notices, to the extra compliance burden potentially requiring new staff to cope with it, the bill’s current form risks undermining the Government’s commitment to smarter regulation.”
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Three-quarters of Britons subscribeto at least one streaming service, while more than half have three or more subscriptions, research shows.
The strict new rules for subscription services in only a small part of the Digital Markets, Competition and Consumers Bill. The legislation is designed to strengthen the hand of the Competition and Markets Authority (CMA) to decide when consumer law has been broken — rather than being forced to fight each case in court. It will empower the CMA to fine businesses up to 10% of global turnover.
It also has several rules designed to prevent the largest player in any given digital category from throwing its size and weight around to limit market access — and therefore, limit innovation — from newcomers.
