As part of a newly launched Digital Markets Strategy the Competition and Markets Authority (CMA) has launched a market study of online platforms and digital advertising.

The CMA are assessing three broad areas within the market for digital advertising:

1. The market power of online platforms in consumer-facing markets: under this theme, the CMA propose to examine to what extent online platforms in these consumer-facing markets enjoy market power as a result of economies of scope and scale, network effects and their ability to extract valuable data from their users. The CMA propose to examine whether these sources of market power raise barriers to entry in user-facing markets to the detriment of consumers and lead to market power in the digital advertising markets to the detriment of consumers.
2. Consumer control over data collection practices: The CMA propose to consider whether consumers have the knowledge, skills and desire to control how data about them is collected and used by the online platforms, and how far they are able to exercise such choice. Within this theme, the CMA will examine the relationship between consumers and consumer-facing online platforms and whether the choices of consumers are limited through terms and conditions or other practices, for example website or app design.
3. Competition in the supply of digital advertising in the UK: the CMA propose to examine the extent to which platforms’ market power might distort competition in digital advertising, as well as concerns around transparency and conflicts of interest in the intermediation of advertising. This is a highly-complicated market and the focus of our work in this theme will be on investigating those concerns that are most likely to lead to bad outcomes for consumers.

The CMA has invited comments by July 30 2019 on the issues raised in the Statement of scope and called for responses from online platforms, advertisers, publishers, intermediaries within the ad tech stack.

A market study was a key recommendation from the Cairncross Review, where Dame Frances called for the CMA to conduct an investigation, the review said:

“By looking more closely into the position of different players, their roles, costs and profitability, the CMA will be able to identify how efficiently the online advertising market is working, and what remedies, if any, are needed.”

PPA Managing Director, Owen Meredith, welcomed the announcement, saying:

“We are pleased the CMA has listen to calls from industry, as well as those from both Dame Frances Cairncross and Jason Furman following their independent reviews, and has decided to move ahead with a market study of the digital advertising market.

“We know that the digital advertising market is complex and involves many intermediaries between brand and consumer, but the lack of transparency in this value chain raises questions the CMA should rightly investigate to ensure confidence in the market. We look forward to working with the CMA to ensure strong publisher representation in the study.”

The CMA's final report will be published, including any proposed recommendations or remedies, no later than July 2020, with an interim report containing its initial findings by 2 January 2020.