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Posted on December 18, 2019 by staff

Google and Facebook’s ad dominance to be scrutinised

The Competition and Markets Authority (CMA) has suggested stronger regulation may be on the way for Google and Facebook to avoid the two firms holding a monopoly over the digital marketing sector in Britain.

It said Goggle accounted for more than 90 per cent of all UK revenue earned for search advertising last year at around £6bn.

Facebook, it said, accounted for nearly 50 per cent of the $5bn UK display advertising.

“Most of us visit social media sites and search on the internet every day, but how these firms work can be a mystery,” CMA CEO Andrea Coscelli said.

“Digital advertising fuels big businesses like Google and Facebook and we have been building a picture of how this complex new market works.”

A market study by the CMA was launched in July to examine concerns and remedies for the market power held in the digital advertising sector by the pair.

It singled out the two tech giants, and their respective subsidiaries such as YouTube and Instagram as holding leading positions in the market for online advertising in the UK, with the majority of digital advertising revenue in the UK split between the two businesses.

It is now consulting on a range of potential interventions to improve competition in the digital advertising market, which include a code of conduct to govern the behaviour of platforms with market power; rules to give consumers greater control over their data and interventions to address the sources of their market power.

The costs of digital advertising, which the CMA estimates was around £13bn in the UK in 2018, is reflected in the prices of goods and services across the economy, it said.

“Therefore, if these costs are higher than they would be in a more competitive market, this will be felt in the prices that consumers pay for hotels, flights, consumer electronics, insurance and many other products that make heavy use of digital advertising,” the report said.

Following this most recent interim report, the CMA’s final report will be published in July 2020.