The U.K. government has written to the country’s competition authority to ask the watchdog to respond to concerns about the lack of transparency in the digital advertising market and carry out a formal market study “as soon as possible.”
In a letter to the Competition and Markets Authority, chancellor Philip Hammond writes that the online ad sector “has been widely described as lacking transparency.”
“A Market Study would provide greater understanding of the existence, nature and potential solutions to any problems within the digital advertising market, and would further develop understanding of the operation of platform markets which rely on digital advertising for revenue,” he continues. “It would also enhance the CMA’s ability to detect and assess digital mergers when these may be of concern.”
The government’s move follows the publication of an independent review of competition policy this week, which recommended ministers ask the CMA to examine the market.
The government-commissioned Furman review also called for wider policy changes to respond to competition and consumer problems created by “winner takes all” tech platforms.
Hammond’s letter goes on to note that several U.K. parliamentary subcommittees have also called for regulatory scrutiny of online adtech practices in recent months, including the Digital Culture Media and Sport (DCMS) select committee, which called for the CMA to probe Facebook’s business practices.
Last year the U.K.’s data watchdog also called for an ethical pause of online political advertising — warning of risks to democratic debate and trust.
Reached for a response to the government’s call for it to prioritize a market review of online advertising, a spokesperson for the CMA pointed us to its response to the Furman review yesterday — in which it says it has also been considering whether to undertake work in the digital advertising market.
Though it warns that its ability to launch new projects is “heavily dependent on the outcome of EU Exit negotiations” — a reference to the ongoing Brexit process in the U.K. following the country’s 2016 referendum vote to leave the European Union.
In his letter, Hammond accepts that anything other than “an orderly exit” from the EU might derail the watchdog’s ability to prioritize a review of the online ad market, as he would like it to.
“I wish to be clear that I recognise the potential challenges on CMA resourcing associated with scenarios relating to the UK’s departure from the European Union other than an orderly exit,” he writes. “For these reasons I am today writing to ask whether the CMA Board would prioritise a decision on whether to take forward a market study into digital advertising market, as soon as you consider it possible to do so, and come forward with recommendations.”
Neither the CMA nor the government make mention of how social media targeted ads might have impacted the Brexit vote itself in their respective statements of concern about the online ad market.
Yet, last year, the U.K.’s Electoral Commission found that the official Leave campaign had breached election campaign spending limits — with illegal spend going on targeting pro-Brexit ads at voters on social media, principally via Facebook.
Last month’s DCMS committee report was also especially trenchant in its criticism of Facebook’s business practices — with MPs singling out the company for what it dubbed “disingenuous” and “bad faith” responses to genuine democratic concerns about the misuse of people’s data.
The other digital adtech elephant in the room is of course Google — which has been accused of essentially running its own market given its hold on various key links in the digital adtech chain.
The key question, which any future CMA review would surely probe, is how Google’s dominance affects other players in the online ad market and the ecosystem as a whole?
We reached out to Google and Facebook for a response to Hammond’s request that the CMA prioritize carrying out a formal market review of online advertising.
Facebook told us it’s not commenting on the Furman review — though that’s not actually what we asked it — saying it’s still reviewing the report itself. It added that it had valued the opportunity to contribute to the process.
In a follow-up response, Facebook’s spokeswoman told us she wasn’t sure whether it would have anything further to add vis-à-vis the government pushing forward with asking the CMA to review the ad market.
At the time of writing, Google had not responded to our request for comment.
The company later pointed us to a statement made by local tech industry member association, Tech UK — which counts Google UK as a member — responding in a statement yesterday to the chancellor’s Spring Speech announcement instructing the CMA to prioritize an ad market review by saying it and its members would “closely engage in this review into the market.”
“Many businesses across the economy depend upon a well-functioning online advertising market,” said Tech UK deputy CEO Antony Walker. “Any intervention must be carefully thought through and targeted. Most importantly, the CMA must ensure it has the necessary technical experts available to conduct a review. This will require staff who truly understand the complexities of the adtech market and the role these platforms play in the wider digital ecosystem.”
This report was updated with additional comment.