UK watchdog calls for action on Google and Facebook’s market power

UK competition watchdog the CMA has called on the British government to take on Google and Facebook’s market power in the online advertising market.

According to the regulator, based on the results of a year-long market study, “existing laws are not suitable for effective regulation” and it is “recommending a new pro-competition regulatory regime to govern the behaviour of major platforms funded by digital advertising, like Google and Facebook”.

The watchdog said that UK expenditure on digital advertising was around £14 billion in 2019, but the market is overwhelmingly dominated by Google and Facebook. While Google has a 90% share of the £7.3 billion search advertising market, Facebook has a share of over 50% of the £5.5 billion display advertising market.

The CMA said it was “concerned” that the pair “have developed such unassailable market positions that rivals can no longer compete on equal terms”, with Facebook seen as a ‘must have’ network for most people and Google paying large sums to be the default search engine on mobile devices and browsers.

The regulator called on the government to create a new Digital Markets IUnit to ensure that the pair do not engage in exploitative or exclusionary practices, to order Google to open up its click and query data to rival search engines and Facebook to ncrease its interoperability with competing social media platforms, to restrict Google’s ability to secure its place as the default search engine on mobile devices and browsers, to order Facebook to give consumers a choice over whether to receive personalised advertising and to order the separation of platforms where necessary to ensure healthy competition.

The CMA’s call comes after a period that has seen US tech giants come under increasing scrutiny by European and national regulators elsewhere, with EC competition commissioner Margarethe Vestager calling for tough action to dismantle de facto monopolies following the Commission’s launch of a public consultation on the Digital Services Act, which would see ‘gatekeeper’ companies subject to new rules.

“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 fuel their business models. What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out. People will carry on handing over more of their personal data than necessary, a lack of competition could mean higher prices for goods and services bought online and we could all miss out on the benefits of the next innovative digital platform,” said CMA chief executive Andrea Coscelli.

“Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives.”