Competition watchdog pressures government to take on tech giants
The Competition and Markets Authority (CMA) has said existing UK laws are not suitable for effective regulation, calling on the government to overhaul its structure so it can better tackle tech market dominance.
The watchdog said it needs more support to govern the behaviour of “major platforms funded by digital advertising, like Google and Facebook”, following a year-long examination of the sector.
“While both originally grew by offering better services than the main platforms in the market at the time, the CMA is concerned that they have developed such unassailable market positions that rivals can no longer compete on equal terms,” it said in a report published today.
It said approximately 80 per cent of the UK’s £14bn expenditure on digital advertising in 2019 went to Google and Facebook.
It called for a new Digital Markets Unit to be established, which would be able to enforce a new code of conduct and levy fines against those who engage in exploitative or exclusionary practices, or practices likely to reduce trust and transparency.
The CMA recommended that the new unit should also be able to order Google and Facebook to open up their data to rivals, and that it could have the power to split up platforms where necessary.
It also said it would be launching a Digital Markets Taskforce today, in collaboration with the ICO and Ofcom, to deliver more findings on its report to the government by the end of 2020.
Google holds more than 90 per cent of the £7.3bn search advertising market in the UK, while Facebook has a share of over 50 per cent of the £5.5bn display advertising market.
“What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out,” said CMA chief executive Andrea Coscelli.
“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.”
Ronan Harris, Google’s vice president for the UK and Ireland, said the tech giant supports regulation of the sector, adding: “We’ll continue to work constructively with regulatory authorities and government on these important areas so that everyone can make the most of the web.”
A Facebook spokesperson challenged the CMA’s assertion that it faces little rivalry in the sector, saying: “We face significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like Tiktok, which keeps us on our toes.”
“We look forward to engaging with UK government bodies on rules that protect consumers and help small businesses rebuild as the British economy recovers,” they added.