07 December, 2020
On 1 July 2020, the Competition and Markets Authority ('CMA') published its final report [AM1] having assessed how well digital advertising platforms are working, and the role of Google and Facebook within them. The report was prompted by several calls for the CMA to review the online advertising market due to concerns that large online platforms could be restricting competition.
The CMA found that power in digital advertising is mainly concentrated between Google and Facebook, as they are overwhelmingly the largest platforms. Specifically, Google has more than a 90% share of the search advertising market in UK, whilst Facebook has over 50% of the display advertising market.
The CMA's report identified concerns that weak competition in digital advertising leads to reduced innovation and choice, as the ability of others to produce valuable content is compromised. Weak competition also increases the prices of goods and services, and "potential rivals can no longer compete on equal terms." In light of the findings, the CMA made four recommendations to establish a new regime to address and rectify the behaviour of platforms with substantial market power, and the government recently published its response [AM2] to the CMA's final report.
Overall, the government accepts the findings of the CMA's report and supports the adoption of the recommendations, though more work is needed to iron out the finer details. The government expects to consult on proposals for the DMU in early 2021, with a view to it becoming operational on 1 April 2021. In the meantime, we await for further developments and confirmation from government about the specifics of the DMU and the extent of its' powers.
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