UK new law to prevent Google and Facebook using digital dominance

The United Kingdom will impose a new competition regime next year to prevent Google and Facebook using their dominance to push out smaller firms and disadvantage consumers, Reuters reported.
Google and Facebook
A dedicated unit within the Competition and Markets Authority (CMA) will introduce a code to keep the technology giants in check.

Business Secretary Alok Sharma said: “Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives. But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers.”

Google and Facebook dominate digital advertising business, accounting for around 80 percent of 14 billion pounds spent in 2019, Britain’s competition regulator the CMA said.

CMA analysis shows that in the UK both Google and Facebook are consistently earning profits well above what is required to reward investors with a fair return. Google earned £1.7 billion more profit in 2018 than the benchmark level of profits. For Facebook, the comparable figure for 2018 was £650 million.

CMA notes the number of adverts that consumers are exposed to on digital platforms is increasing, with adverts seen per hour on Facebook rising from 40-50 in 2016 to 50-60 in 2019. Its average revenue per user is now more than ten times higher than competitors.

In 2016, Google increased the maximum number of adverts displayed following a search query and moved these to the centre of the page above organic results. In the UK its prices for advertising on desktop and mobile are also 30 to 40 per cent higher than Microsoft Bing’s, its main competitor.

The digital sector contributed nearly £150 billion to the UK economy in 2018 – driving opportunity, productivity and creativity in every corner of the UK.

The two U.S. companies have said they are committed to working with the British government and regulator on digital advertising, including giving users greater control over their data and the ads they are served.

Britain’s Digital Secretary Oliver Dowden said there was a growing consensus that the concentration of power in a small number of companies was curtailing growth, reducing innovation and having negative impacts on the people and businesses that rely on them.

The Digital Markets Unit, which will begin work in April, will have powers to suspend, block and reverse decisions made by technology firms and to impose financial penalties for non-compliance.

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, give consumers a choice over whether to receive personalised advertising, and prevented from placing restrictions on their customers that make it hard for them to use rival platforms.

Companies will have to be more transparent about how they use consumer data and restrictions that make it hard to use rival platforms will be banned, the government said, adding that the rules will also support the news industry, rebalancing the relationship between publishers and platforms.

The CMA said on Monday it was assessing whether a complaint about Google technology warranted a formal investigation.

Marketers for an Open Web (MOW), a coalition of technology and publishing companies, said Google was modifying its Chrome browser and Chromium developer tools to give it greater control over publishers and advertisers.

Google said advertising practices needed to adapt to changing expectations around how data was collected and used.