Friday 27 November 2020 7:13 am

Tech giants hit with new rules amid calls to fix ‘dysfunctional’ ad market

Facebook and Google will be subjected to tighter scrutiny over how they use consumer data as ministers face calls to fix the “dysfunctional” online advertising market.

The government today announced the launch of a new digital markets unit aimed at curbing the dominance of tech giants and giving consumers greater control over their personal data.

Under a new code of conduct, platforms such as Facebook and Google will be required to show greater transparency about the services they provide and how they use consumer data.

They will also be made to give users a choice over whether to receive personalised advertising and will be blocked from making it harder for their users to switch to rival platforms.

The new unit, which will come into force in April, will be granted powers to suspend, block and reverse the decisions of tech giants, order them to take actions to comply with the code and issue fines for any breaches.

It comes as a House of Lords committee ramped up pressure on the government to “stop dragging its feet” over new tech regulation.

In a report published today, peers blasted the “dysfunctional” online ad market, highlighting in particular the “fundamental imbalance of power” between platforms and news publishers.

“Online advertising is crucial to news publishers’ success, but there’s a fundamental imbalance of power between them and platforms such as Facebook and Google whose overwhelming market dominance means they dictate the terms on which they use publishers’ content, including whether and how much they pay for it,” said Lord Gilbert of Panteg, chair of the Lords Communications and Digital Committee.

The government said its digital markets unit was designed to level the playing field for small businesses, ensuring they are given fair terms for services such as digital advertising.

In particular, it said the new code will address the power of tech giants to limit the amount of revenue publishers can generate from their content.

But the peers called for ministers to go further and force online platforms to pay publishers for the right to use their content. They also called for new rules requiring Google to give data to rival search engines and social media companies to let their users see posts on other platforms. 

Tackling the tech titans

The new unit, which will be set up within the Competition and Markets Authority (CMA), comes in response to the watchdog’s study into the digital advertising market.

In its findings published in July, the CMA found that tech giants such as Google and Facebook had built up an “unassailable market position”, taking roughly 80 per cent of all digital advertising spend in the UK.

It also concluded that a lack of competition in the market pushed up prices for consumers and acted as a “brake on innovation”.

CMA boss Andrea Coscelli today welcomed the formation of the new digital markets unit, adding: “Only through a new pro-competition regulatory regime can we tackle the market power of tech giants like Facebook and Google and ensure that businesses and consumers are protected.”

The new measures form part of a wider crackdown on tech giants amid concerns about monopolistic behaviour and a failure to stamp out misinformation and harmful content.

The government is currently consulting with the newly-created digital markets taskforce over a new regulatory regime, which will be consulted on in 2021.

Culture secretary Oliver Dowden said that while he was “unashamedly pro-tech”, the new measures were required to tackle anti-competitive practices in the market.

“There is growing consensus in the UK and abroad that the concentration of power among a small number of tech companies is curtailing growth of the sector, reducing innovation and having negative impacts on the people and businesses that rely on them,” he said.

Ronan Harris, vice president of Google UK and Ireland, said: “Online tools have proved to be a lifeline during the pandemic and they can help create a digital, sustainable and inclusive recovery.

“We support an approach that benefits people, businesses and society and we look forward to working constructively with the Digital Markets Unit so that everyone can make the most of the internet.”

The future of journalism

The Lords report, entitled Breaking News? The Future of UK Journalism, said digital platforms were “part of a bigger problem” for news publishers.

Laying out its damning findings, the committee concluded that British journalism was facing an “existential threat”, and urged ministers to fast track new regulation to help ensure the industry’s survival.

Aside from addressing the digital ad market, peers said the government should also grant Ofcom powers to regulate public service broadcasters’ online news.

They also called for Ofcom — which is set to assume the role of internet regulator — to ensure that public service broadcasters monitor the accuracy and impartiality of their journalists’ social media posts.

It comes after new BBC director general Tim Davie outlined strict new rules banning the organisation’s stars from expressing personal opinions online.