A new code is to be given to tech giants such as Google and Facebook which is designed to set expectations for platforms that have considerable market power.
Under the new code, platforms including those funded by digital advertising could be required to be more transparent about the services they provide and how they are using consumers’ data, the government said.
Around £14bn was spent on digital advertising in the UK in 2019, around 80% of which was spent on Google and Facebook, it reports.
The code is hoped to give consumers a choice over whether to receive personalised advertising, and prevent the tech giants from placing restrictions on customers that make it hard for them to use rival platforms.
The new unit, informed by the work of the new Digital Markets Taskforce will begin work in April.
It could be given powers to suspend, block and reverse decisions of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance.
Business Secretary Alok Sharma called it a “pro-competition regime for digital markets” which will “ensure consumers have choice, and mean smaller firms aren’t pushed out.”
The government said proposals could also help give small businesses fair access to platform services including digital advertising, allowing them to grow their business’ online presence.
The code could be used to ensure platforms are not applying unfair terms, conditions or policies to certain business customers, including news publishers.
Digital Secretary Oliver Dowden said there was a “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.”
The government has set out its plans to take forward the development of the new unit and code of conduct in its response to the market study it asked the Competition and Markets Authority to produce on online platforms and digital marketing.
Through its study, the CMA found that, a lack of competition in digital markets prevents the development of new, valuable services for consumers, and results in higher prices for businesses using the platforms – which are then passed on to consumers.
The study also said Google has significant market power in the general search market and in search advertising, and Facebook has significant market power in the social media market and in display advertising.
It also suggests the potential for broader social harm, providing evidence of broader harms due to weak competition, such as the negative impact on the quality of journalism.