UK Markets closed

'Strong argument' for stricter Facebook and Google rules in UK

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
The logos of mobile apps Facebook and Google. Photo: DENIS CHARLET/AFP via Getty Images

Facebook (FB) and Google (GOOGL) dominate the UK online advertising market, hoovering up £8bn a year in sales between them.

The UK’s Competition and Markets Authority (CMA) on Wednesday published the interim results of its investigation into the UK digital advertising market, saying there is a “strong argument for the development of a new regulatory regime.”

The review found Google earns 90% of all online search revenue in the UK, amounting to £6bn a year. The search giant also paid £1bn last year to make sure it was the default search operator on various devices in the UK, including iPhones.

In online display advertising, 50% of all UK spend goes to Facebook, equivalent to £2bn a year.

‘Negative consequences’

The CMA said it had concerns that Google and Facebook “may have become entrenched with negative consequences for the people and businesses who use these services every day.”

The watchdog fears newspapers and other news producers in the UK are losing out and competition is being dampened, potentially harming innovation. The CMA also has concerns about the way these platforms collect user data and the lack of transparency around content algorithms and ad buying systems.

“Most of us visit social media sites and search on the internet every day, but how these firms work can be a mystery,” CMA chief executive Andrea Coscelli said in a statement.

“Digital advertising fuels big businesses like Google and Facebook and we have been building a picture of how this complex new market works.

“We’ve looked especially at how these firms collect and use people’s data, how they monetise it and what this means for rival companies who want to compete, as well as the people and businesses using these services every day.”

The CMA said it was drawing up proposals for regulation that it would put to the government. These proposals may include forcing Google to share search query and click data with rivals, limiting Google’s ability to be a default search engine, forcing Facebook to connect more easily with other social networks, and allowing users to turn off personalised advertising.

READ MORE: Pound loses all election gains on hard Brexit fears