CMA launches digital market investigation

Written by Hannah McGrath
04.07.2019

The Competition and Markets Authority (CMA) has launched an investigation to the influence of BigTech firms on digital advertising markets and the impact of personal data use on consumers.

The UK competition watchdog’s digital markets strategy will examine major online platforms and their monetisation of data through digital advertising.

The scope of the investigation will consider “the sources of any market power, the way they collect and use personal data, and whether competition in digital advertising is producing good outcomes for consumers”.

A total of 97 per cent of internet users log on to a search engine to browse online, and 70 per cent have a social media account, the CMA said, with sites utilising the data collected from these platforms to generate digital advertising revenue, which in turn enables them to continue to offer their services for free to consumers.

The move comes after the Furman report, published in March, called on the government to beef up the powers of regulators to scrutinise mergers and promote competition in the digital sector, with a particular emphasis on the way BigTech firms operate.

Launching its investigation, the CMA warned that if it “finds evidence that there are problems as part of this, it could make detailed recommendations to government which build on the broad proposals from the Furman Report”.

It will also be advising the government on the ways in which the Furman recommendations can be implemented most effectively. Such proposals could hand further sanctions to regulators to ensure tech giants are not exploiting their dominance of the digital advertising and social media platforms.

Andrew Tyrie, chairman of the CMA, said: “Much about these fast-changing markets is a closed book to most people, the work we do will open them up to greater scrutiny, and should give parliament and the public a better grip on what global online platforms are doing.

“These are global markets, so we should and will work more closely than before with authorities around the world, as we all consider new approaches to the challenges posed by them.”

The study will also examine how the CMA will continue to use its existing merger and enforcement tools effectively, while adapting them to meet the challenges of the digital age.

CMA chief executive Andrea Coscelli said: “The market study will help us further lift the lid on how major online platforms work, especially how they collect and use personal data, how they monetise their content through digital advertising, and what this means for competition.”

“The CMA will examine whether people have the skills, knowledge and control over how information about them is collected and used, so they can decide whether or not to share it in the first place.”