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July 4, 2019

Competition Watchdog Launches Probe into £13 Billion UK Digital Ads Market

CMA could make "detailed recommendations"...

By CBR Staff Writer

The UK’s competition watchdog has launched an investigation of Facebook and Google’s digital market dominance. The probe, launched Wednesday and reporting July 2020, comes as part of its response to an independent review of digital competition.

Facebook and Google have an estimated 61 percent share of digital advertising revenues in the country. Digital advertising now accounts for over half of all advertising in the UK with digital ads currently worth over £13 billion in the UK.

The Competition and Markets Authority (CMA) announced the news as it launched its new digital strategy this week – a move made in response to the Furman Report: an analysis published in March 2019 by an independent digital competition panel.

CMA Chairman, Andrew Tyrie said: “It is our job to ensure that companies innovate and compete. And every bit as much, it’s our job to ensure that consumers are protected from detriment. Implementation of the Furman Report should help a lot… These are global markets, so we should and will work more closely than before with authorities around the world, as we all consider new approaches to the challenges posed by them.”

Ad Market Competition Probe

Announcing the investigation, the CMA said it will scrutinise:

  • To what extent online platforms have market power in user-facing markets, and what impact this has on consumers
  • 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

It is inviting comments [pdf] throughout the rest of the month, from “interested parties such as online platforms, advertisers, publishers, intermediaries within the ad tech stack, representative professional bodies, government and consumer groups.”

See also: IBM iX and Mediaocean Bet on Blockchain to Tackle Ad Spend Opacity

The Furman Report urged the creation of a digital markets unit to promote competition. The panel envisaged the unit as tasked with developing a code of competitive conduct for major players in the market, increasing data mobility and interoperability between online platforms and utilising data openness in order to achieve its objectives.

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The CMA noted: “An important element of the strategy is today’s opening of a market study into online platforms. This will examine the major online platforms such as Facebook and Google which are funded by digital advertising. It will consider the sources of any market power, the way they collect and use personal data, and whether competition in digital advertising is producing good outcomes for consumers.

The CMA said that if it “finds evidence” that there are problems resulting from the market dominance of the duopoly, it could make “detailed recommendations” to government.

Facebook alone made a colossal $55 billion in revenues from advertising globally during the 2017-2018 financial year, while Google generated $32.6 billion in advertising revenue during the last quarter of 2018 alone.

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