There are now increasing calls by one of the UK regulators to try and tackle the prominence and influence of the silicon valley giants, with tech behemoths such as Google and Facebook firmly in the crosshairs. This position is something that the Competition and Markets Authority (CMA) is strengthening after becoming concerned that the dominance of these tech giants through their digital software and advertising platforms may be hurting competition.
The regulator has growing concerns that people using those particular platforms may not have a full understanding of how their data is being used, questioning whether the users may even have full control over their data at all. These issues have arisen amid new reports since the general election that the government will start a new digital watchdog that will be tasked with overseeing these businesses and their activities within the digital marketing space.
The Financial Times reported recently that the regulator will have new powers that will enable them to add teeth to enforcing codes of conduct on big tech firms – the thought is that this will allow people to be able to access and monitor the data that those businesses hold about them in the future.
It is thought that Google has around 90% of the search advertising market revenue in the UK, accounting for revenue of around £6bn. In addition to this, Facebook themselves take about half of the UK online display advertising revenue; which weighed in at £2bn in 2018. Some criticisms though are based around the fact that; especially for Google, these platforms are used by the vast majority of the population; so of course businesses are going to use the platforms to advertise. The CMA rebutted this, though; with the comment that “big is not necessarily bad” and that both of the tech giants in question offer innovative products and services.
The report by the CMA stated that Google and Facebook could possibly have become entrenched in the UK which therefore has a negative effect for the end users of their services. The real knock on effect here is that this lack of any real competition to their advertising monopoly could potentially mean higher advertising costs being passed on to consumers. There is also the possibility of stifling the “next great new idea from a potential rival” as claimed by the CMA.
The market dominance of Google and Facebook “may potentially be undermining the ability of newspapers and other publishers to produce valuable content as their share of revenues is squeezed by large platforms,” the CMA added.
Another issue is based upon the lack of transparency that comes with how their platforms work; with unexplained traffic drops and other fluctuations coming from the “infamous” algorithms; of which some sources state are potentially updated almost once per day over a year long period. It is this opaqueness that is causing a rift between advertisers and the tech giants themselves; but the CMA are arguing that the advertisers do not have any viable alternatives and are almost trapped into a “use the platform or lose out” mentality.
Since the introduction of the new GDPR legislation back in 2018, the public perception over data and the way that it is used (and even exploited as per a few of the GDPR fines distributed for companies such as Cambridge Analytica and even, in this case; Facebook) has grown ever since. It is in the collection of people’s personal data that makes Facebook and Google’s advertising platforms so powerful to advertisers; with the ability to choose from thousands of different data points in order to really narrow down target markets in order to get very specific, personalised messages across.
“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 platforms also do not really allow a “ half in, half out” solution to this, either; “forcing [consumers] to share considerable amounts of personal data as a condition for using the service,” the CMA said. Privacy settings are difficult to access, it added.
So it is within this, seemingly total market monopoly and “use-it-or-lose-it” mentality that has caused the CMA to start looking into ways to take action in order to try and reduce the powerful hold that these tech software giants have over it’s users and advertisers alike. The CMA said at this stage “there is a strong argument for the development of a new regulatory regime” which could “include rules governing the behaviour of online platforms and giving people greater control over their own data”.
Google, though; have countered these claims by encouraging the regulator to understand that their advertising 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” according to Ronan Harris, Google UK and Ireland’s Vice President. Mr Harris went on to explain that Google have included easy-to-use controls to help people to manage their data within all of Google’s services, such as the ability to turn off personalised advertising.
“We’ll continue to work constructively with the CMA and the government on these important areas, so that everyone can make the most of the web.”
A Facebook spokesman said: “We are fully committed to engaging in the consultation process around the CMA’s preliminary report, and continuing to deliver the benefits of technology and relevant advertising to the millions of people and small businesses in the UK who use our services.”
“We agree with the CMA that people should have control over their data and transparency around how it is used. In fact, 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.”