The competition watchdog has launched an inquiry into major tech firms amid fears about their dominance in the digital advertising market.
The Competition and Markets Authority (CMA) today said it has launched a market study into online platforms such as Facebook and Google, which are funded almost entirely by digital advertising.
The watchdog said it will consider the monopoly power of these firms, the way they collect and use data, and whether there is enough competition in the digital advertising market.
The CMA said it will make detailed recommendations to government if its probe uncovers evidence of any problems in the market.
The inquiry, which forms part of a wider digital markets strategy, comes after Chancellor Philip Hammond called for greater regulation of the digital advertising sector.
An independent review conducted earlier this year by former Obama adviser Jason Furman raised concerns about the dominance of tech giants and said the market suffered from a lack of transparency.
“The market study will help us further lift the lid on how major online platforms work, especially how they collect and use personal data, how they monetise their content through digital advertising, and what this means for competition,” said CMA chief executive Andrea Coscelli.
“The findings from this work will be used to influence the direction of policy and regulation in the digital sector.”
The probe will examine how tech firms use people’s personal data, and will consider whether the sale of data to advertisers is creating a good environment for consumers.
The CMA will also examine whether people understand how their data is collected and used, and whether tech giants have too great a hold over consumer information.
The investigation marks the latest effort by the government to clamp down on tech giants as pressure mounts to bring in strict new regulation to protect users.
James Barge, director of public policy at advertising industry body Isba, welcomed the investigation.
“ISBA has been engaging on behalf of our members to establish tougher business standards and greater transparency. We look forward to engaging positively with this review as we seek to deliver greater choice, transparency and accountability in the market.” he said.