Existing laws not enough to tame Facebook and Google, UK government told

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Google and Facebook, control 80% of UK online advertising between them. Photo: Denis Charlet/AFP via Getty Images

The UK’s competition watchdog is calling for the government to introduce tough new rules to rein in the power of Facebook (FB) and Google (GOOGL), following a year-long review into the digital advertising market.

The Competition and Markets Authority (CMA) said on Wednesday it was recommending a new regulatory regime complete with enforcement powers to try and open up competition in the digital advertising market.

“Existing laws are not suitable for effective regulation,” the CMA said, calling for “a new pro-competition regulatory regime”.

The proposals are aimed squarely at Google and Facebook, which between them control 80% of UK online advertising.

“Through our examination of this market, we have discovered how major online platforms like Google and Facebook operate and how they use digital advertising to fuel their business models,” CMA chief executive Andrea Coscelli said in a statement.

“What we have found is concerning — if the market power of these firms goes unchecked, people and businesses will lose out.

“People will carry on handing over more of their personal data than necessary, a lack of competition could mean higher prices for goods and services bought online and we could all miss out on the benefits of the next innovative digital platform.”

Read more: 'Strong argument' for stricter Facebook and Google rules in UK

The CMA wants an enforceable code of conduct that would prohibit “exploitative or exclusionary practices.” The watchdog also wants Google to be forced to share data with rival search engines and Facebook to be forced to make it easier for rivals to operate on its platforms.

Proposals also include new powers to breakup platforms if they are deemed to be anti-competitive.

“Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives,” Coscelli said.

The recommendations follow a year-long review into the market by the CMA. Its interim report in December 2019 concluded there was a “strong argument” for stricter rules governing Facebook and Google.

Ronan Harris, vice president at Google UK & Ireland, said in a statement: “We support regulation that benefits people, businesses and society and we’ll continue to work constructively with regulatory authorities and government on these important areas so that everyone can make the most of the web.”

A spokesperson for Facebook said it already faces “significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok.”

“Giving people meaningful controls over how their data is collected and used is important, which is why we have introduced industry leading tools for people to control how their data is used to inform the ads they see,” the spokesperson said. “We’re also exploring new ways through which people can move their data to other services through our Data Transfer Project.

“We look forward to engaging with UK government bodies on rules that protect consumers and help small businesses rebuild as the British economy recovers.”