Big techs including Facebook, Amazon, and Google have come under fire by the UK regulator. The Competition and Markets Authority has said that the country tougher rules for online giants in 2020.
The UK regulator has concerns that the big techs might be wielding too much power that could be harming competition and thereby foster online monopoly. The CMA worries also that users of these platforms may not have absolute control of their data.
These comments follow reports that the government will create a new digital watchdog that will oversee these platforms. The new regulator will have new powers which will include enforcing a new code of conduct for big techs to adhere to and allowing users more control over their data.
Google and Facebook are advertising companies which amass huge profit from advertising. While Google takes the lion’s share of search advertising sales in the UK with a turnover of £6bn pounds in 2018, Facebook, the largest social networking site takes about half of UK online advertising revenue, accounting for £2b in the same year.
The CMA says the huge revenue is not a bad thing for a company especially as both firms offer innovative services. However, both companies may have placed themselves in strong defensive position in the market “with negative responses for the people and businesses who use these services every day.”
The CMA said monopoly harms both the consumers and potential rivals. A lack of real competition could mean that the consumers would have to pay more for advertising costs. People could also miss out on great new ideas from potential rivals because of the dominating power of the big techs.
“The marketing dominance of Google and Facebook may potentially be undermining the ability of newspapers and other publishers to produce valuable content as their shares of revenues is squeezed by large platforms,” the CMA added.
The CMA said further that both platforms are transparent with how they use users’ data and how their algorithms really work. Users’ data harvested allow them to target advertising at individuals more effectively than others do. “Both for privacy and competition reasons, it is essential that people feel in control of their data. At the moment, the CMA is concerned that this is not always the case,” the CMA said.
It said that Facebook has an approach that compels users to share considerable amount of personal data as a condition to use its service. At this stage, said the CMA, there is a valid reason for a new regulator which would oversee the behaviour of online platforms and allowing people a larger control of their data.
Google in defence said its platform “helps British businesses of all sizes find customers in the UK and across the world and supports the websites that people know and love with revenue and reach.”
The company said that its platform allows people to manage their data such as “the ability to turn off personalised advertising and to automatically delete their search history.”
Facebook said it supports the CMA in allowing people have total control over their data and defended its process. “For every ad we show, we give people the option to find out why they are seeing that ad and an option to turn off ads from that advertiser entirely.”
Regardless of what the CMA thinks an investigation is unlikely to unfold according to law firm Linklaters, who said that a market investigation would be inappropriate. However, the CMA maintains that 2020 will be a year of intense scrutiny to address global concerns about the online advertising sector.