Google and Facebook ‘strangling ads market’
FACEBOOK and Google’s iron grip on digital advertising risks driving up the prices paid by consumers for flights, electronics and insurance, a watchdog has warned.
The Competition and Markets authority (CMA) said the tech giants’ overwhelming dominance of the market meant they could ramp up advertising prices, prompting businesses to pass on costs to customers.
It said huge profits made by Google and Facebook already suggested an ‘exploitation of market power’ and called for tough new rules to improve transparency and make it easier for smaller firms to compete.
The CMA said the control the two giants have over the market is squeezing publishers and news organisations that rely on advertising as a vital source of income.
In a series of possible measures, the watchdog suggested the appointment of a regulator to monitor the activities of the firms. and in a warning shot it said it was keeping an ‘open mind’ about a separa
‘Took more than 90 per cent of revenues’
tion of Google’s advertising arm from the rest of its business.
In an initial report on its study of the digital advertising market, the CMA found Google took more than 90 per cent of the revenues from internet search advertising in the Uk last year – around £6billion.
Facebook took almost half of all revenues from online display advertising – such as banner ads – more than £2billion.
The watchdog stopped short of recommending immediate action, saying it was for the Government to draw up rules to regulate the market. It plans to publish a final report next summer.
Ronan Harris, vice-president of Google Uk and Ireland, said: ‘The digital advertising industry helps british businesses of all sizes find customers, and supports the websites people know and love. We’ll continue to work constructively with the CMA and the Government.’
Facebook 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 in the Uk who use our services.’