A new tech watchdog will be given the power to impose multibillion-pound fines on major firms such as Google and Facebook if they breach rules designed to protect consumers and businesses.

The Digital Markets Unit (DMU) will protect small businesses from predatory practices and will give consumers greater control over how their data is used, the government said.

The Department for Digital, Culture, Media and Sport said ministers will introduce legislation to underpin the DMU’s powers in “due course” amid speculation that only a draft bill will be mentioned in the Queen’s speech next week.

The new unit, established last year, operates within the UK’s competition watchdog, the Competition and Markets Authority, and will enforce new codes of conduct for the biggest tech firms operating in the UK. The rules will make it easier for smartphone users to choose which search engines they use and will allow consumers to opt out of targeted personalised adverts.

“The customer is always right, but sometimes they don’t get a choice,” said the consumer minister, Paul Scully. “We’ll stop companies from using their power to harm customers, whether they’re limiting shoppers’ choices to certain software on their devices or making it hard for people to decide how their data is used.”

Tech companies will be required to inform businesses of significant changes that would affect them, such as algorithm adjustments that steer traffic away from certain sites. The unit will also be given the power to resolve disputes between tech platforms and news providers, so that publishers are paid fairly for their content. App developers will also be able to sell their apps on fairer and more transparent terms, the government said.

The DMU will have the power to impose fines of up to 10% of a company’s global turnover – nearly £10bn in the case of Facebook’s owner, Meta – or 5% of daily global turnover for each day that an offence continues.

“The CMA welcomes these proposals and we’re pleased that the government has taken forward a number of our recommendations that will allow the DMU to oversee an effective and robust digital markets regime in the UK,” said Andrea Coscelli, the chief executive of the CMA.

The government is also introducing the online safety bill, which is due to feature in the Queen’s speech and requires tech firms to protect users from harmful content such as images of child sexual abuse. The bill, which is due to become law around the end of the year, will be enforced by the communications regulator, Ofcom, and will also carry the threat of multibillion-pound fine for breaches.

The online safety bill also carries the threat of criminal prosecutions for tech executives for offences such as hampering an Ofcom investigation. The government said that under the DMU senior company managers will face civil penalties if their businesses do not engage properly with requests for information.