META Meta Platforms Inc

--The Competition and Markets Authority has called on the U.K. government to introduce new regulations for digital advertising

--Existing laws aren't suitable to regulate the likes of Google and Facebook, the regulator said

--Google and Facebook said they face fierce competition, but vowed to cooperate

By Adria Calatayud

The U.K.'s antitrust watchdog on Wednesday called on the U.K. government to introduce a new regulatory regime to boost competition, and tackle Google and Facebook Inc.'s market power in digital advertising.

The Competition and Markets Authority said existing laws aren't suitable for effective regulation of the behavior of major platforms funded by digital advertising. This conclusion followed a year-long examination of online platforms and digital advertising, after which the CMA said Facebook and Google--part of Alphabet Inc.--have developed such unassailable market positions that rivals can no longer compete on equal terms.

The regulator said Google and Facebook earn about 80% of digital-advertising spending in the U.K., which was around 14 billion pounds ($17.36 billion) last year.

"What we have found is concerning--if the market power of these firms goes unchecked, people and businesses will lose out," CMA Chief Executive Andrea Coscelli said.

The regulator proposed a new regulatory regime that would include opening up Google's click-and-query data to rival search engines and increase Facebook's interoperability with competing social media platforms, among other measures. The CMA said new regulations should have the ability to order the separation of platforms where necessary to ensure healthy competition.

In response to the CMA, Google and Facebook said they face competition in the advertising market, both from online and offline players, and vowed to work with the U.K. government.

"Advertisers today choose from a wide range of platforms that compete with each [other] to deliver the most effective and innovative ad formats and products," Google's U.K. and Ireland vice president Ronan Harris said.

Facebook said providing a service funded by advertising gives millions of people and businesses in the U.K. the opportunity to connect.

"We face significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok which keeps us on our toes," a Facebook spokesperson said.

The CMA said Facebook and Google's large user base is a source of market power and each has unmatchable access to user data. Both use default settings to nudge people into using their services and giving up their data, and their presence across different markets makes it harder for rivals to compete, the regulator said. Furthermore, protecting people's control over their data is paramount to privacy and to a healthy market, the CMA said.

The British regulator said, while its recommendation is U.K.-focused, the problems it has identified are international in nature.

The CMA also said it is launching a taskforce together with privacy watchdog Information Commissioner's Office and media regulator Ofcom that will advise the government on how to design new rules. The group will deliver advice to the government by the end of the year, the CMA said.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

July 01, 2020 09:12 ET (13:12 GMT)

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