UK government to probe whether digital ad market poses 'harm' to people

The inquiry forms part of a wider digital markets strategy from the government

The UK government's Competition and Markets Authority (CMA) has launched an investigation into the digital advertising dominance of online platforms like Google and Facebook, as well as how consumer data is used in the wider market.

The probe could have far-reaching implications not only for the ad-supported digital duopoly, but also for adtech players.

"We are assessing three broad potential sources of harm to consumers in connection with the market for digital advertising," said the CMA in a statement.

It will cover the extent to which online platforms have "market power" and the impact of their dominance on consumers, as well as how people are actually able to control the data used and collected by companies like Facebook. It will also look at whether competition in the digital ad sector is being "distorted by any market power held by platforms".

The inquiry forms part of a wider digital markets strategy from the government and follows on from UK chancellor Philip Hammond using his spring budget to call for greater regulation in the space.

The CMA has previously said that a review of the industry would be carried out "subject to an orderly exit from the EU", however it appears to have brought the deadline forward.

It is inviting comments from online platforms, advertisers, publishers, intermediaries within the adtech stack, representative professional bodies, government and consumer groups by 30 July.

If the CMA finds evidence of problems within the digital ad market, it could then make detailed recommendations to government.

The report is likely to build on the broad proposals outlined in an independent review conducted earlier this year by former Obama adviser Jason Furman, in which he found the sector to be "dominated by two players and suffering from a lack of transparency".

CMA chief executive Andrea Coscelli said: "The market study will help us further lift the lid on how major online platforms work, especially how they collect and use personal data, how they monetise their content through digital advertising, and what this means for competition.

“The findings from this work will be used to influence the direction of policy and regulation in the digital sector.”

James Barge, director of public policy at Isba, said the advertisers' trade body welcomed the investigation.

"Isba's Programmatic Supply Chain Transparency study, being carried out by PwC and in conjunction with the Association of Online Publishers (AOP), is the world’s first end-to-end investigative audit into the actual cost of adtech to the media budget," he added.

"We look forward to engaging positively with this review as we seek to deliver greater choice, transparency and accountability in the market."

Google and Facebook are coming under increasing scrutiny from regulators, not just in the UK but also in the US and in Europe. Last year, the former was hit with a record $5bn antitrust fine from EU regulators who ordered it to stop using its popular Android mobile operating system to block rivals. Google said it was to appeal the ruling.

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