Facebook, Google should be investigated for dominating digital advertising, UK finance minister says
- U.K. Finance Minister Philip Hammond urged the Competition and Markets Authority (CMA) to launch a review of Britain's digital advertising market.
- Google and Facebook accounted for an estimated 54 percent of digital advertising revenues in the U.K. in 2017.
- The CMA said it is considering whether to undertake work in the digital advertising sector but added its ability to launch new projects is "heavily dependent on the outcome of EU Exit negotiations."
The U.K.'s competition watchdog should examine the dominance of tech companies like Facebook and Google in digital advertising "as soon as possible," Britain's finance minister said.
In his Spring budget statement to the Parliament on Wednesday, U.K. Finance Minister Philip Hammond urged the Competition and Markets Authority (CMA) to launch a review of Britain's digital advertising market, citing concerns that digital platforms are stifling competition.
"I am today writing to ask whether the CMA Board would prioritise a decision on whether to take forward a market study into digital advertising market, as soon as you consider it possible to do so, and come forward with recommendations," Hammond said in a letter to the CMA also sent on Wednesday.
Hammond welcomed the findings of a U.K. government report published on Wednesday that recommended Britain's competition rules "must be updated for the digital age." The 150-page report stopped short of calling for a break-up of big tech but found companies like Google, Facebook, Amazon, Apple and Microsoft are stifling innovation and limiting consumer choice.
Google and Facebook accounted for an estimated 54 percent of digital advertising revenues in the U.K. in 2017, according to the report.
"In addition to the prominent position occupied by the digital platforms, there are a number of market features that may present barriers to entry and expansion," the report said.
The CMA said on Wednesday it is considering whether to undertake work in the digital advertising sector but added its ability to launch new projects is "heavily dependent on the outcome of EU Exit negotiations."
Like many other organizations in the British government, the CMA is facing uncertainty over its role once the U.K. leaves the European Union. Lawmakers rejected Theresa May's Brexit deal in a resounding defeat Tuesday and are set to vote on an extension to the Brexit deadline, currently March 29, Thursday night. In his letter, Hammond acknowledged the CMA would have "increased responsibility for ongoing competition cases with a European dimension" after Brexit.
The U.K. government has published several reports over the past month examining the dominance of big tech companies.
The U.K. Digital, Culture, Media and Sport committee concluded an 18-month investigation in February on the role of social media companies in spreading "fake news" and disinformation. It concluded Facebook had "intentionally and knowingly" violated U.K. data privacy and anti-competition laws.
A separate government report published in February urged the U.K.'s competition authority to take steps to ensure "the position of Google and Facebook does not do undue harm to publishers" in the online advertising industry.
Facebook and Google were not immediately available for comment when contacted by CNBC.