The Competition and Markets Authority (CMA) this week released the final report of its market study into online platforms and digital advertising, focusing on search and social media platforms.
Rather than take direct action, the CMA is of the view it is not equipped to address competition concerns by dominant online platforms funded by digital advertising and has made recommendations to government to establish a ‘pro-competitive regulatory regime for online platforms with strategic market status’ with a new regulator, the Digital Markets Unit, to regulate competition in the digital market.
The CMA recommends two broad categories of intervention: a code of conduct for the larger platforms that are funded through digital advertising and 'pro-competitive' interventions to tackle the sources of market power.
Some of the recommended interventions are (unsurprisingly) targeted at one of the main causes of the dominant positions of platforms: their access to vast troves of data, including personal data. Recommendations in this context include ways to enhance consumer control over data, mandating interoperability, requiring platforms to grant third-party access to data in certain circumstances and mandating data separation.
The CMA also addresses concerns that the larger platforms may be using data protection regulations, like the GDPR, as a justification to restrict access to valuable data whilst using it to their advantage, and that the larger platforms are effectively operating as ‘quasi-regulatory authorities’, setting rules not just within their own ecosystems, but for other market participants.
Google’s recent announcement that it was phasing out support for third-party cookies on the Chrome browser, restricting publishers’ ability to offer personalised advertising, is an important example of this.
The CMA is engaging with the ICO on these issues as well as the other issues related to the intersection of competition and data protection law, including:
How the proposed ‘Fairness by Design’ principle would complement the data protection by design obligation under the GDPR;
Exploring the principle of ‘competition neutrality’ in design and application of data protection regulation in digital advertising; and
Investigating the use of default preferences, presentation of choices and control mechanisms which may tend towards, and sometimes appear designed to encourage, the over-collection of data.
Looking beyond platforms funded through digital advertising, the CMA, as part of the Digital Markets Taskforce together with the ICO and Ofcom, will lead further work to provide advice to government on the necessary action to promote competition in wider digital platform markets and has launched a call for information from stakeholders in this regard.
It remains to be seen how this plays out, especially given similar investigations underway around the world and some recent closely-related developments in other countries. One thing is certain: the issues that arise at the intersection of data protection and competition law are more widely understood than before, and will only become more apparent as more companies across industry increasingly rely on data for their growth and success.
We have identified a wide range of specific interventions that the DMU could introduce under this regime to tackle the market power of Google and Facebook.