The UK government has confirmed it intends to create a new regulator that can fine Google and Facebook for competition abuses and unacceptable behaviour in the online ad market.
The move was expected after a detailed Competition and Markets Authority investigation, published in July, called for new regulatory powers to curb Google and Facebook’s dominance in digital advertising.
Today the government said the CMA will be given new powers in the form of a dedicated Digital Markets Unit, which can write and enforce a new code of practice on the tech companies.
The code will apply to significant tech players – referred to as those having “strategic market status”. This clearly refers to Google and Facebook, which dominate respective online ad markets for search and social media, but it is not clear whether it applies to any other company.
In a report summarising its response to the summer CMA study, the government said: “The [Digital Markets Unit] includes powers to suspend, block and reverse decisions of SMS firms, order conduct to achieve compliance with the code and financial penalties for noncompliance.”
The government added that it will consult on its proposed reforms next year.
About £14bn was spent on digital advertising in the UK in 2019, with approximately 80% of that spent on Google and Facebook, today’s report highlighted.
The business secretary, Alok Sharma, said: “Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives – whether it’s helping us stay in touch with our loved ones, share creative content or access the latest news.
“But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers. Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out.”