The CMA asks the UK Government to reform competition law to tackle Google and Facebook’s market power.
Concerns of an unassailable duopoly: On 1 July 2020, the CMA concluded its one-year long investigation into online platforms and digital advertising. The CMA is concerned that both companies have now developed ‘unassailable’ market positions. Their large user base, and their unmatched access to user data, allows for unrivalled targeted advertising. Both companies use default settings to nudge people into using their services and giving up their data – for example Google paid around £1.2bn in 2019 to be the default search provider on mobile devices and browsers in the UK, while Facebook requires users to accept personalised advertising. The companies’ presence across many different markets further strengthens their dominance. The CMA considers these factors combined create barriers difficult to overcome, which could cause harm to consumers if high prices for advertising ended up affecting retail prices. Press publishers are also affected, since they are reliant on Google and Facebook for almost 40% of all visits to their sites. This dependency potentially squeezes their share of digital advertising revenues.
The need for a new regime: The CMA notes that existing laws are not suitable for effective regulation. The authority calls for powers to order Google to open up its click-and-query data to rival search engines, to allow them to improve their algorithms so they can properly compete; and to order Facebook to increase its interoperability with competing social media platforms. The CMA also asks for the power to restrict Google’s ability to secure its place as the default search engine, and to order Facebook to give consumers a choice on whether to receive personalised advertising. Where necessary, platforms should be separated to ensure competition.
A Digital Markets Taskforce is formed: The CMA also announced the formal launch of a Digital Markets Taskforce, working with the ICO and Ofcom, which will advise the Government on how a new regulatory regime for digital markets should be designed. The Taskforce will deliver advice to the Government by the end of 2020.
