Brussels, BELGIUM — The UK Competition and Markets Authority today published its final report on online platforms and digital advertising. The CMA’s recommendations would grant far-reaching powers to a new digital regulator to impose company-specific regulations, force product design changes, redistribute assets, and order the breakup of platforms.
The Computer & Communications Industry Association encourages the CMA to continue focusing on “ensuring that the enormous innovation and benefits brought about through digitalisation can continue”, as it committed to doing in its Digital Markets Strategy. CCIA is concerned that the CMA’s proposed interventions would jeopardise this important objective. In particular, the CMA’s recommended proposals to “address the sources of market power” risk punishing pro-competitive conduct that benefits users and advertisers, and reducing the competitive pressure that drives innovation and growth across the economy.
CCIA contributed to the CMA’s “Online platforms and digital advertising” market study (in July 2019, February 2020, and May 2020). CCIA recommended 13 specific areas where the Interim Report could be improved to better account for market realities and the interests of consumers and advertisers. We are disappointed that the vast majority of these points were not addressed. Despite the tremendous amount of additional work that the CMA has done over the last six months, more needs to be done. CCIA looks forward to working closely with the CMA and the newly announced Digital Markets Taskforce to facilitate an evidence-based analysis of the topics covered in the Final Report.
The following can be attributed to CCIA Competition Counsel Kayvan Hazemi-Jebelli:
“The CMA’s selective focus on two companies risks missing the broader picture that the digital advertising sector is competitive. Startups and traditional media companies increasingly compete with online platforms by offering innovative advertising and media services.
The current competition framework is well equipped to intervene if a company engages in anticompetitive behavior, while preserving incentives to invest, innovate and compete.”
“We hope the newly announced Digital Markets Taskforce will seek out the views of the many smaller firms that benefit greatly from the size and efficiency of large digital services providers. These smaller voices are likely to suffer from the unintended consequences of any overbroad government intervention in highly dynamic technology sectors.”
“It would be counter-productive to promote the interests of one narrow segment of the advertising ecosystem if greater costs would be suffered by the ecosystem as a whole. The CMA’s expressed concerns over network effects and economic efficiencies of large technology companies sound like it wants to change the market structure, rather than prevent competitive harm. This is unfortunate.”