UK CMA seeks to curb dominance of online advertising on Google and Facebook

The logos of the Facebook and Google applications displayed on a tablet.

Denis Charlet | AFP via Getty Images

The UK competition watchdog has made recommendations for new regulations to tackle Google and Facebook’s dominance in the online advertising market.

The Competition and Markets Authority (CMA) announced on Wednesday that it had proposed the creation of a “Digital Markets Unit” intended to curb platforms with “a position of market power” in digital advertising.

The new unit would enforce a code of conduct on Google, Facebook and other major industry players to ensure they don’t “engage in exploitative or exclusionary practices.” He 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 competing search engines, force Facebook to give consumers the choice of whether or not to accept targeted advertising, and to impose a “separation of platforms if necessary”. “

The CMA said it wanted to “lift the lid on how ad revenue drives the business model of major platforms.” According to the regulator, around 80% of the £ 14 billion ($ 17 billion) UK spending on digital advertising in 2019 went to Google and Facebook. Google has more than 90% of the UK search engine advertising market, according to the CMA, while Facebook controls more than 50% of the display advertising industry.

“Advertisers today choose from a wide range of platforms that compete to deliver the most effective and innovative advertising formats and products,” Ronan Harris, Google vice president for the Kingdom said Wednesday. United and Ireland. “We support regulation that benefits people, businesses and society and we will continue to work constructively with regulators and government on these important areas so that everyone can get the most out of the web. “

Facebook said the company would engage with UK government bodies “on rules that protect consumers and help small businesses rebuild themselves as the UK economy recovers” from the coronavirus pandemic.

“We face significant competition from Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok, who are keeping us on our toes,” a company spokesperson said in a statement. . “It’s important to give people meaningful controls over how their data is collected and used, which is why we’ve introduced cutting edge tools for people to control how their data is used to inform which ads. ‘they see.”

The problem is “international in nature”

Although the CMA’s recommendations are country-focused, the watchdog said the issues he identified were “international in nature” and he would seek to “play a leading role in the global scale ”as part of its digital strategy.

“Through our review of this market, we discovered how major online platforms like Google and Facebook work and how they are using digital advertising to power their business models,” said Andrea Coscelli, CEO of CMA. “What we found is concerning – if the market power of these companies is not controlled, people and companies will be the losers.”

“People will continue to transmit more of their personal data than necessary, a lack of competition could mean higher prices for goods and services purchased online and we could all be missing out on the benefits of the next innovative digital platform.” , said Coscelli.

The CMA launched a review of the UK digital advertising industry last year, looking to see whether Google and Facebook were hurting competition. In December, the authority released an interim report in which it raised concerns about the influence the two tech giants have in space. Now he says existing laws are not enough to effectively regulate these businesses.

He said he was also working with UK data protection and media regulators on a new “digital markets task force”. The task force, which was originally mandated by the government, will advise Prime Minister Boris Johnson’s administration on how a new digital marketplace regulatory regime should be designed, the CMA said.

The regulator says it is writing to platforms and seeking views and information on the matter, and aims to provide advice to the government by the end of the year.

The UK isn’t the only country where regulators are questioning Google and Facebook’s control over online advertising. In the United States, 50 state attorneys general have joined a Google investigation into possible anti-competitive practices in its advertising business. Meanwhile, Facebook has also been the subject of an antitrust review in the country.

But it comes at a particularly tense time for Facebook, as the social media giant battles the advertiser exodus that has seen big brands from Unilever to Starbucks stop spending on its ads.