The logos of the Facebook and Google applications are displayed on a tablet.
Denis Charlet | AFP via Getty Images
Britain’s competition regulator has established recommendations for new regulations to address the dominance of Google and Facebook in the online advertising market.
The Competition and Markets Authority (CMA) said on Wednesday that it had proposed the creation of a “Digital Markets Unit” designed to control the platforms with “a position of market power” when it comes to digital ads.
The new unit would apply a code of conduct to Google, Facebook and other major industry players to ensure that they do not “engage in exploitation or foreclosure practices.” It would have the power to impose fines on companies if necessary.
Under the proposed new rules, the CMA is asking for the ability to order Google to share click and query data with rival search engines, compel Facebook to choose between accepting targeted advertising and imposing “platform separation when necessary.” “
The CMA said it wants “to lift the lid on how advertising revenue drives the business model of major platforms.” According to the regulator, around 80% of the £ 14 billion ($ 17 billion) of UK spending on digital ads in 2019 went to Google and Facebook. Google has more than a 90% share of the UK search advertising market, the CMA said, while Facebook controls more than 50% of the graphic advertising sector.
“Today’s advertisers choose from a wide range of competing platforms to deliver the most effective and innovative advertising formats and products,” said Ronan Harris, Google’s vice president for the UK and Ireland, in a statement on Wednesday. “We support regulation that benefits individuals, companies, and society and will continue to work constructively with regulatory authorities and the Government in these important areas so that everyone can make the most of the web.”
Facebook said the company would engage with UK government agencies “in rules that protect consumers and help small businesses rebuild as the British economy recovers” from the coronavirus pandemic.
“We are facing significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok, which keeps us alert,” a company spokesperson said in a statement. “It is important to give people meaningful controls over how their data is collected and used, so we have introduced industry leading tools for people to control how their data is used to report the ads they see.”
The problem is international in nature.
Although the CMA’s recommendations have an internal focus, the watchdog said the problems it had identified were “international in nature” and that it would seek “to take a leading role globally” as part of its digital strategy.
“Through our examination of this market, we have discovered how major online platforms like Google and Facebook operate and how they use digital advertising to drive their business models,” said Andrea Coscelli, CMA Executive Director. “What we have found is troubling: if the market power of these companies is not controlled, people and companies will lose.”
“People will continue to deliver more of their personal data than is necessary, lack of competition could mean higher prices for goods and services purchased online, and we could all lose the benefits of the upcoming innovative digital platform,” said Coscelli.
The CMA launched a review in Britain’s digital advertising industry last year, seeking to assess whether Google and Facebook were hurting competition. In December, the authority released an interim report outlining concerns regarding the influence the two tech giants have in space. Now, he says that existing laws are not enough to effectively regulate such companies.
He said he is also working with UK media and data protection regulators on a new “Digital Markets Task Force”. The task force, which had originally been commissioned by the government, will advise Prime Minister Boris Johnson’s administration on how a new regime should be designed to regulate digital markets, the CMA said.
The regulator says it is writing to platforms and seeking insights and information on the matter, and its goal is to provide advice to the government by the end of the year.
The UK is not the only country where regulators question Google and Facebook’s command over online advertising. In the United States, 50 attorneys general joined a Google investigation into possible anti-competitive practices in its ad business. Meanwhile, Facebook has also come under antitrust scrutiny in the country.
But a particularly tense time comes for Facebook as the social media giant battles an exodus of advertisers that has seen big brands from Unilever to Starbucks stop spending on their ads.
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