The UK Competition and Markets Authority (CMA) has launched its Digital Markets Strategy and, linked to this, an online platforms and digital advertising market study (“Market Study“).

This alert sets out the key points of the Market Study for our technology clients to consider. This is recommended reading for any lawyers and other business professionals working in regulatory enforcement, data protection, competition, consumer law and particularly for lawyers working for technology companies that are active in the UK and around the world.

Please see our separate client alert that sets out the context of the CMA Digital Markets Strategy.

Market Study

Concurrently with the launch of the Digital Markets Strategy, the CMA has launched a Market Study into online platforms and the digital advertising market in the UK.

Comments are invited from a wide range of potentially interested parties such as online platforms, advertisers, publishers, intermediaries within the ad tech stack, representative professional bodies, government and consumer groups. However, any persons wishing to make representations to the CMA can do so. Comments can be provided by email to onlineplatforms@cma.gov.uk, or by post, before the deadline of 30 July 2019.

The submissions received may influence whether the CMA decides to make a market investigation reference, as well as the views and findings of the CMA on this subject, and any other proposals for recommendations or remedies that the CMA could make at the conclusion of the Market Study.

As part of the process, the CMA will also look to draw together and evaluate existing research; issue specific information requests to industry participants, technical specialists, and academics and commentators; meet interested parties through bilateral meetings, roundtables and workshops; and conduct its own qualitative and/or quantitative research.

At the conclusion of this process, the CMA’s final report will be published, including any proposed recommendations or remedies, no later than 2 July 2020. However, the CMA will also publish an interim report with its initial findings and views on remedies (including whether a market investigation reference is necessary), by 2 January 2020.

The CMA could open consumer or competition enforcement cases either during or at the end of the study.

Themes and ideas to be assessed by the Market Study

The Market Study aims to assess three broad themes in connection with the markets for online platforms and digital advertising:

  1. The market power of online platforms in consumer-facing markets – asking to what extent online platforms have market power in user-facing markets, and what impact this has on consumers;
  2. Consumer control over data use and collection practices – examining whether consumers are able and willing to control how data about them is used and collected by online platforms; and
  3. Competition in the supply of digital advertising in the UK – assessing whether competition in the digital advertising market may be distorted by any market power held by platforms.

The Statement of Scope provides further details on these themes, and it gives an early indication of the potential direction of the Market Study and how the CMA may approach and examine different ideas. In particular, the Statement of Scope frames the three themes mentioned above in terms of the positioning of platforms in two sided markets. In consumer-facing markets an online service is provided by platforms in return for time, attention and access to data (where themes 1 and 2 are relevant), and in business-to-business digital advertising markets platforms and content providers monetise such time and attention by selling advertising inventory to advertisers (where theme 3 is relevant).

The Statement of Scope goes on to contemplate potential remedies that the CMA could recommend if it considers that interventions would be appropriate. These include:

  • increasing competition through data mobility, open standards and open data;
  • giving consumers greater protection in respect of data;
  • limiting platforms’ ability to exercise market power;
  • improving transparency and oversight for digital advertisers and content providers; and
  • institutional reform

The CMA currently expects that any such remedies are likely to follow proposals of the Furman review for the development of an ex ante regulatory regime – and noting that this would likely require Government driven legislative change. The potential remedies identified also link closely to key elements of the Digital Markets Strategy.

Recommendations

As noted above, submissions can be made by any interested party no later than 30 July 2019. Therefore, in advance of this deadline carefully consider whether you wish to provide a response to the announcement of this Market Study and what the content of this response might be.

Key points and questions to consider for this purpose include:

  • the CMA’s description of the sector in the Statement of Scope, and whether this is broadly accurate;
  • the proposed scope of the market study, including whether there are areas the CMA should particularly focus on, and whether there are important areas that have been missed;
  • the three themes identified, including views on the potential concerns the CMA has indicated that it is considering;
  • the range of potential remedies, including whether they would be appropriate, proportionate, and effective; and
  • the CMA’s proposed approach to evidence gathering.

It is also important to be mindful of any concerns surrounding confidentiality and/or business secrets. The CMA will publish summaries of the evidence received and will often publish full responses from businesses and other organisations. Information submitted may also ultimately be included in the CMA’s interim and final reports.

We would be happy to help advise our clients on strategy for engaging with the market study.

See further

Link to the Market Study page including timetable here.

Link to the Market Study Notice here.

Link to the Market Study Statement of Scope here.

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