The UK’s House of Lords today called for the Competition and Markets Authority (CMA) to investigate the digital ad industry and explore whether the competition laws are enough to regulate companies like Facebook and Google.
The House of Lords’ Communications Committee has been conducting an inquiry into the state of digital advertising since September 2017, and published a report today in which it also called for greater self-regulation within the industry, and for the government to take steps to protect the industry post-Brexit.
However it also suggested that it could be necessary for the CMA to take action, and that competition laws might need to be updated. The report said that the “superfluidity of ad tech intermediaries”, as well as control of the market at all levels by companies like Google, could be creating an unfair market, and called on the CMA to investigate.
It went on to say that “the dominance of Google and Facebook leads us to question whether current competition law is adequate to regulate the 21st century digital economy that is increasingly driven by personal data rather than money,” suggesting that the government should use the recently announced Digital Charter to gather evidence on this issue.
The Lords’ report simultaneously recognised the importance to the UK of its ad industry, calling it a “success story”, but it also stated that data-driven advertising can cause potential harm to businesses and consumers. The report painted adland as “dysfunctional and opaque”, and claimed the Committee had heard evidence that even individuals within the industry do not have a comprehensive understanding of how advertising business models work.
The Committee’s chairman, Lord Gilbert of Panteg, summed up the issues as he sees them. “Businesses which buy advertising services don’t know how their money is being spent, whether their advertising is being displayed next to content which is obscene or which supports terrorism, or whether their ads are being viewed by a human being at all,” he said.
“The consumer’s experience is also poor as they may be bombarded with clickbait, or their personal data may be exploited without their knowledge,” he added.
The Lords concluded that greater self-regulation within the industry might be sufficient to solve these problems. The Committee’s report recommended that the largest industry bodies should commit to signing up fully to the Joint Industry Committee for Web Standards (JICWEBS) and other similar third parties. It also called for the industry to push forward with efforts to ensure content is vetted before being made available for ad placements.
The Committee noted its concerns that after the UK’s withdrawal from the EU, the Union’s regulatory influence will be lost. It asked the government to ensure that the CMA will be equipped to handle cases which would otherwise have been dealt with by the European Commission, and also recommended that the UK maintains regulatory alignment with the EU on data protection.
The report also outlined worries that Brexit could deprive Britain’s ad industry of access to international talent.
“The UK advertising industry is a global leader because it has access to talented individuals from around the world, including the EU. These workers provide the cultural, creative, digital and languages skills which enable the UK to win advertising accounts from multi-national companies for global campaigns,” it said.
“Extending the tiered visa system to EU nationals will create an unmanageable barrier to finding and hiring the talent that the advertising industry needs to maintain its global success.”
The Committee recommended a number of initiatives to help solve this problem, including the creation of a creative industries’ freelancer visa, and extension of Tier 4 visas, and a more general effort to make the visa system easier and cheaper to navigate for both individuals and companies.