UK watchdog singles out Google, Facebook in advertising probe

The CMA wants to understand exactly how dominant the tech giants are in UK advertising.

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UK regulators are launching a new study that will examine how Google and Facebook operate given their dominant position in UK advertising circles. 

This week, the UK's Competition and Markets Authority (CMA), a competition watchdog, said that the organization is carrying out a new market study into online platforms and the digital advertising market in the UK.

The report will examine the potential risk factors and harm which could be impacting consumers today in the world of online advertising. The main areas CMA cites (.PDF) as worthy of investigation are:

  • To what extent online platforms have market power in user-facing markets;
  • Whether consumers are able and willing to control how data about them is used and collected by online platforms;
  • Whether competition in the digital advertising market may be distorted by any market power held by platforms

The CMA wants to ascertain whether or not Facebook and Google's influence in UK advertising may be harmful to consumers. An estimated minimum of 50 percent of UK advertising expenditure is now spent on online platforms and these two companies alone are forecast to control at least 70 percent of the market by 2020. 

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This puts Google and Facebook in a position of heavy influence and power in UK advertising, and as such, the organization wants to know how consumer data is handled and used for both advertising purposes and monetization.

There is a concern when it comes to how knowledgeable -- and therefore what level of informed consent is in play -- consumers are when it comes to the use of their data. The investigation will attempt to connect the dots between understanding, the exercise of choice by consumers, and just how much choice they actually have in their data collection, storage, and use. 

"Despite the valuable services provided by the online platforms that are funded by digital advertising, we have heard a number of concerns that the sector is not working well," the CMA says. "These concerns relate to the market power of the main platforms in consumer-facing markets, the lack of consumer control over the use of their data and the ways in which this is monetized by the platforms."

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In addition, the CMA wants to ascertain whether or not new entrants to the market might be hampered or prevented from competing. 

UK regulators have identified five areas in which "regulatory reforms may be required" pending the results of the investigation. This includes methods to improve competition through open standards and data; means to lower the barriers to entry by competitors; ways to increase consumer data protection; and an examination of data consent rules to encourage a "fairness by design" architecture. 

When it comes to the dominant players in the market, the CMA is also considering the creation of new regulations to bind their ability to exercise power in the market if they are found to be hampering competition -- whether on purpose or inadvertently. 

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New rules could include stipulations on transparency when it comes to platform advertising operations, regulations on how platforms are allowed to interact with each other, and new UK stipulations when it comes to discrimination and pricing. 

The UK watchdog has invited comments from interested parties at this stage of the investigation. The CMA's report will be published by 2 July 2020. 

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