Published: Fri, March 15, 2019
Economy | By

Tech giants do not face enough competition, review says

Tech giants do not face enough competition, review says

Harvard professor Jason Furman, who led the review, said: "The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation".

The creation of a new competition unit with expertise in behavioural science as well as technology and economics.

The review also recommends changes to merger rules so that the Competition and Markets Authority (CMA) is better equipped to stop mergers that are considered likely to damage future competition or consumer choice.

The CMA confirmed that subject to an orderly exit from the European Union (and therefore resources) it will carry out a review to assess how regulation affects competition in the United Kingdom business environment.

In addition, the review urges the CMA to launch an inquiry into the digital advertising market, which it states is dominated by two major players and suffers from a lack of transparency.

"I will carefully examine the proposals put forward by the panel before responding later this year, setting out how the Government will implement the changes needed to ensure our digital markets are competitive and consumers get the level of choice they deserve".

In his spring statement, Hammond also said the government would make technology companies "pay their fair share" and "protect consumers from online harm". Westminster would, he claimed, "lead the world in delivering a digital economy that works for everyone".

With 16 days to go before the United Kingdom leaves the European Union and publication of "No Deal consequences" data this morning, a bit of Facebook-bashing in Hammond's statement today is unlikely to attract too much scrutiny. Last year, the former was hit with a record $5bn antitrust fine from European Union regulators who ordered it to stop using its popular Android mobile operating system to block rivals. Google said it was to appeal the ruling.

"The Chancellor's call for the CMA to look into the digital ad market is the first step in a much bigger journey for the industry", said Paul Wright, General Manager EMEA at Sizmek, a buy-side advertising platform.

Britain's House of Lords recently called for a new digital regulatory authority to provide overall oversight.

Double-digit growth will push digital advertising spend in the United Kingdom above £15bn in 2019, according to forecasts from Barclays.

The report cites a number of "problematic" tech mergers and takeovers to support its case, including Google's £1.3 billion takeover of YouTube in 2006, Facebook's £765 million grab for Instagram in 2012, and Apple's £2.3 billion takeover of headphones firm Beats Electronics in 2014.

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