Google and Facebook ad power risks driving up price of online purchases – CMA

The competition watchdog said the tech giants could use their market position to increase ad prices, which risk being passed on to consumers.

Google and Facebook’s “dominance” in advertising risks driving up prices for flights, electronics and insurance, the competition watchdog has warned.

The Competition and Markets Authority (CMA) fears the tech giants’ large market share could allow them to increase advertising prices, which could consequently be passed on to consumers buying online.

Google accounted for more than 90% of all revenues earned from search advertising in the UK in 2018, with revenues of around £6 billion, an interim report into digital advertising states.

Social media giant Facebook accounted for almost half of all display advertising revenues in the UK, the CMA found, reaching more than £2 billion.

It claims that Google paid around £1 billion – the equivalent of 16% of its total annual UK search revenues – to be the default search engine on mobile devices, with the “vast majority” of these payments going to Apple.

There is also concern that the pair’s power is making it impossible for rivals to compete on “equal terms”, as well as squeezing newspapers and other publishers, jeopardising their ability to produce content.

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

“So far in this study, we have used our legal powers to discover how major online platforms operate.

“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 interim report – which is open to views by February ahead of a full report later in 2020 – says people must be in control of their data.

However, it notes that big is not necessarily bad, highlighting the innovative and valuable products and services introduced by tech giants.

“At the end of the study, we’ll present our findings to the new Government as they decide whether and how to regulate what is an increasingly central sector in all our lives,” Ms Coscelli added.

Ronan Harris, vice president for Google UK and Ireland, said: “The digital advertising industry 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.

“We’ve built easy-to-use controls that enable people to manage their data in Google’s services – such as the ability to turn off personalised advertising and to automatically delete their search history.

“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.”

The CMA says Facebook accounted for almost half of all display advertising revenues in the UK, reaching more than £2 billion (Dominic Lipinski/PA)

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.

“We also provide industry-leading tools to help people control their data, like ‘Off Facebook Activity’, and to transfer it to other services through our data transfer tools. We look forward to further engagement with the CMA on these topics.”

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