Dominance of Google and Facebook prevents rivals from competing with them on equal terms, warns CMA
The CMA will release its final report into the UK online advertising industry in the summer
The dominance of tech giants such as Facebook and Google in the UK's digital advertising market is preventing rivals from competing with them on "equal terms".
That is according to UK's Competition and Markets Authority (CMA) which, in its 283-page interim report [PDF], suggests that the government should consider taking tougher measures to tackle the dominance of the online advertising giants.
The comments from the UK's competition watchdog come amid recent reports claiming that the government is considering setting-up a new regulatory agency to oversee these businesses.
They are both now so large and have such extensive access to data that potential rivals can no longer compete on equal terms
According to the Financial Times, the new watchdog will have the power to implement a new code of conduct for large tech companies to provide more data accessibility for customers.
Google has generated nearly 90 per cent of UK search traffic each year over the past decade and also accounted for more than 90 per cent of UK search advertising revenues last year, according to the CMA.
Facebook, on the other hand, accounted for nearly 50 per cent of the £5 billion in display advertising revenues in the UK in 2018.
"We are concerned that they are both now so large and have such extensive access to data that potential rivals can no longer compete on equal terms," the watchdog said.
It is important that consumers have control over the use of their data
"If competition in search and social media is not working well, this can lead to reduced innovation and choice in the future and to consumers giving up more data than they feel comfortable with."
The watchdog is also concerned that weak competition in online advertising market can increase the prices of services while also hurting the ability of newspapers to publish valuable content.
The CMA's market study was launched in July, a few weeks after the Authority published its own report raising privacy concerns around programmatic advertising by big tech firms.
The Authority will release a final report on the issue next summer, presenting final conclusions and recommendations for interventions.
The CMA said it is currently considering possible "data access remedies" and "measures to increase interoperability and structural interventions".
Forcing Google to separate its advertising unit from the rest of its business is another possible intervention that the data watchdog is considering.
"It is important that consumers have control over the use of their data - allowing them to decide whether to provide or deny access and share it with others if they wish," CMA suggested.
"This will benefit consumers directly and help increase competition between platforms," it added.
In July, the Australian Competition and Consumer Commission published its final report on its 18-month inquiry into the impact of Facebook, Google, and other digital platforms on the day-to-day lives of the people in Australia.
In its report, the Australian watchdog recommended the creation of a new Digital Platforms Branch under its own supervision that would probe how tech firms use their algorithms to match ads with viewers, and whether they are using those algorithms to give precedence to their own products over that of rivals.
Last month, an online advertising company, called Inform, sued Google over anti-competitive practices that, it claimed, drove the company out of the industry.
The company accused Google of engaging in "blatant and rampant coercive and anti-competitive activities" to kill competition from rival firms.