The Competition and Markets Authority has launched its digital markets strategy, setting out how it aims to protect consumers in rapidly developing digital markets, while fostering innovation. It has also opened a market study into online platforms and digital advertising.
The CMA has already carried out a significant body of work in digital markets. This includes assessing various mergers involving digital companies, conducting market studies, such as its digital comparison tools work, and enforcing competition and consumer law in numerous sectors. To date this has included online reviews, price comparison websites, hotel booking websites, cloud storage, social media influencers and online gambling.
The strategy explains how the CMA intends to respond to recommendations made by the Furman Report for greater regulation of digital markets; sets out how the CMA will use its existing merger and enforcement tools effectively, while adapting them where needed to meet the challenges of the digital age. It also makes clear how the CMA will use its expertise in digital markets to shed light on how they work, and so help people make informed judgements on how to get the best out of them.
New challenges in these global digital markets demand the very highest levels of international cooperation, as all authorities consider the need for new approaches. The CMA has already coordinated joint cross-border work on consumer enforcement and has frequently engaged with counterpart competition authorities abroad on enforcement in digital cases. As part of its digital strategy, the CMA will now play a key role in securing high levels of cooperation.
An important element of the strategy is the opening of a market study into online platforms. This will examine the major online platforms such as Facebook and Google which are funded by digital advertising. Most of the UK population uses the internet, with 97% of internet users accessing search engines to look for things online, and around 70% of UK adults having a social media account. While people enjoy many of these sites for free, revenue from digital advertising provides one of the main ways in which online firms can provide their services without charge.
The CMA is assessing three broad potential sources of harm to consumers in connection with the market for digital advertising:
- to what extent online platforms have market power in user-facing markets, and what impact this has on consumers;
- whether consumers are able and willing to control how data about them is used and collected by online platforms; and
- whether competition in the digital advertising market may be distorted by any market power held by platforms.
If the CMA finds evidence that there are problems as part of the market study, it could make detailed recommendations to government which build on the broad proposals from the Furman Report.
