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Competition watchdog launches study into internet firms

Findings from a Competition and Markets Authority consultation will inform a report aimed at assessing how digital advertising can harm UK consumers

The Competition and Markets Authority (CMA) has launched a consultation into online platforms and the digital advertising market in the UK as part of government efforts to encourage greater competition for technology companies.

Findings from the consultation will inform a study which will assess how digital advertising can harm consumers. The initiative is part of the CMA’s Digital Markets Strategy, aimed at protecting consumers in the digital economy while ensuring digital market competition.

The study will look into the extent of power of online platforms and how this affects consumers, the ability and willingness of users to control how their data is collected and used by sites, as well as whether competition in digital advertising may be distorted by the platforms’ market power.

According to research by Plum Consulting into online advertising in the UK, the majority of providers who extract most revenue from digital advertising services are also the largest online players, including Google, Facebook, Amazon, Microsoft, Twitter, Alibaba, Baidu and Tencent.

That concentration of power has sparked a number of concerns, the CMA noted, including issues such as online harms and fake news, the ability of large platforms to extract vast amounts of consumer data to further entrench their market position, and lack of transparency in the business-to-business (B2B) digital advertising market.

The watchdog was called to take action and is one of the main stakeholders that should play a more prominent role in addressing the issues, according to a government review of online giants, published earlier in 2019.

Carried out by a HM Treasury panel and chaired by Harvard professor Jason Furman, the review on the UK’s competition regime in the context of the digital economy outlined the risks around digital market concentration.

One of the recommendations set out in the report is that the government should ensure that authorities responsible for enforcing competition and consumer law, such as the CMA, have more powers to carry out their functions in the digital economy.

The Furman Review also noted that the CMA should be able to block future acquisitions of digital companies if it found that the downsides of removing a competitor from the market outweighed any benefits. The watchdog should also be informed about intended acquisitions by large companies, the report added.

For its study into the digital advertising market, the CMA is interested in hearing feedback from the online platforms, in addition to advertisers, publishers, ad tech intermediaries, as well as professional bodies, consumer groups and government bodies. Submissions can be made until 30 July 2019.

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