Andrea Coscelli, chief executive of the UK’s Competition and Markets Authority (CMA), has fired a warning shot across the bows of Google and Facebook after declaring that the tech titans enjoy an outsize share of the UK online advertising market.
The Silicon Valley giants enjoy a combined share of close to 80% of the £14bn digital advertising market, according to the CMA, a situation Coscelli labels as a “duopoly”.
‘Others need a bigger share’
Explaining what needs to happen to redress the imbalance, Coscelli told the BBC: ”We think it would be good if we got to a situation where others had a bigger share of the market”
Outlining the need for change Coscelli added: ”When companies have too much economic power, that creates a number of distortions, first for competitors, secondly for consumers, and at some level potentially in terms of the political process as well, in some cases.”
As head of the CMA Coscelli is in a position to help make that happen with a remit to ensure markets remain competitive with a diversity of participants.
Drawing attention to the magnitude of Google’s outright domination of the UK's £7.3bn search advertising market, where it currently boasts a market share of 90%, Coscelli warns that an absence of credible rivals poses a ’problem’ that regulators must address.
To a lesser degree, Facebook has also cornered the British display advertising market, commanding a 50% share of the £5.5bn industry which Coscelli also believes to be unhealthy for the sider economy.
Why does it matter
The CMA mood music indicates a hardening regulatory stance against both Facebook and Google with an emphasis on reform over revolution for the moment. Coscelli has not yet endorsed a break-up of either business.
Coscelli said: ”Our current proposal is not to break them up, it’s to have pro-competitive regulation to deal with some of the issues, but it would allow the companies to maintain all the current activities that they have.”
In December the CMA went public with plans to reign in Facebook, Google and other outsize tech firms by weighing them down with customised rules written with the express aim of forestalling ’anti-competitive behaviour’ and handing consumers ’greater control over how their data is used’.
As part of this process, the CMA will establish an internal Digital Markets Unit tasked with drafting specific regulations to make this happen and ensure that the rules are complied with – although this cannot be done without new legislation which may not be enacted until 2022.
This follows the launch of a probe last summer by the UK government over whether the current digital market was harming British consumers.