'New regime' needed to tackle dominance of tech giants Google and Facebook

Facebook and Google would face a crackdown under the CMA's proposed rules.

Under a string of proposals aimed at reforming the sector unveiled by the consumer watchdog, Google’s ability to secure its position as the default search engine on mobile devices and browsers would be restricted in order to introduce more choice for users, while Facebook would have to give consumers a choice over whether to receive personalised advertising.

The Competitions and Markets Authority (CMA) said a year-long investigation had found that barriers in place due to the dominance of certain digital players were “extremely difficult to overcome” for consumers, citing an example that it found that prices for holidays and flights were 30 per cent more expensive using Google than smaller rival Bing.

The watchdog said it recommended a new “pro-competition” regime to govern the behaviour of major platforms funded by digital advertising. It warned that weak competition in search and social media “leads to reduced innovation and choice, as well as to consumers giving up more data than they would like”.

Under the new rules, a new ‘Digital Markets Unit’ would be able to order Google to open up its click and query data to rival search engines to allow them to improve their algorithms so they can properly compete, while Facebook would have to increase its interoperability with competing social media platforms.

A code of conduct would also be introduced to ensure that platforms with a position of market power, like Google and Facebook, do not engage in “exploitative or exclusionary practices”, or practices that are “likely to reduce trust and transparency”. These rules would be enforceable by fines.

CMA chief executive Andrea Coscelli said: “Through our examination of this market, we have discovered how major online platforms like Google and Facebook operate and how they use digital advertising to fuel their business models. What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out. People will carry on handing over more of their personal data than necessary, a lack of competition could mean higher prices for goods and services bought online and we could all miss out on the benefits of the next innovative digital platform.

“Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives.”

Rocio Concha, director of advocacy at Which?, said: “Our research has found that consumers are concerned about how their data is collected and exploited online but feel powerless against tech giants such as Google and Facebook, so it is positive to see the competition regulator pushing to give control back to consumers and address competition concerns.

“People should be able to use these services without sacrificing their data for personalised advertising and consumers have told us they want an opt-in, rather than an opt-out, choice if they are to be targeted in this way.”

The report also said that Google and Facebook’s market positions have a “profound impact” on newspapers and other publishers. The CMA has found that newspapers are reliant on Google and Facebook for almost 40 per cent of all visits to their sites. This dependency potentially squeezes their share of digital advertising revenues, undermining their ability to produce valuable content.

Lord Puttnam, chair of the Committee on Democracy and Digital Technologies, said: “The latest backlash against Facebook is hitting them where it hurts: their wallets and their reputation. Our Select Committee heard that advertisers are genuinely concerned about the reputational damage a brand faces when appearing next to disinformation. It’s therefore no surprise that a lack of substantive action from platforms has led to the current boycott.

“But it is not just up to advertisers to ensure the technology giants deal with the pandemic of misinformation on their platforms. As the CMA report on competition in the sector has pointed out today, the government also has an important role to play and should not duck its responsibility. Only action by the state and regulators will force the likes of Facebook and Google to open up their algorithms for public examination to ensure they are not monetising hate.”

He added: “That process needs to start now with the immediate introduction of a draft Online Harms Bill that covers misinformation. Beyond that our report sets out a programme for change that, taken as a whole, can allow our democratic institutions to wrestle power back from unaccountable corporations, and begin the slow process of restoring trust.”

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