Digital Markets Unit announced by the UK government to help enhance the sustainability of high-quality online journalism and news publishing
- A new code will govern commercial arrangements between publishers and platforms to help keep publishers in business, says the government
- In the same week, Marketers for Open Web asked the Competition and Markets Authority (CMA) to delay Google’s Privacy Sandbox launch, that would“cement its dominance of online business and frustrate bids by regulators around the world to ensure fair competition on the internet”.
By Luciana Gurgel | MediaTalks, London
“Tech giants must stop exploring news“. The article published in The Times on November 27 announcing the British government’s decision to set up a dedicated Digital Markets Unit (DMU) to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market, leaves no doubt about the relevance of this movement to the media industry. But not just for it.
The decision to set up DMU within the country’s competition regulatory agency (Consumer Markets Authority) is a sign that the effects of the initiative will go beyond the borders of journalism. The announcement highlights that:
“Tech giants will be subject to a new regime to give consumers more choice and control over their data, help small businesses thrive, and ensure news outlets are not forced out by their bigger rivals”.
The absence of geographical boundaries for part of the services offered by digital giants, along with technological barriers to restrict the effect of measures imposed by the code of conduct to Britain, mean that effects measures taken have the potential to extend globally.
And the decisions made by the new unit can serve as a model for other countries to follow a similar path locally, taking advantage of studies already done and negotiations with digital companies in the UK.
An urgent matter
The new unit will begin work in April, ahead of schedule. The government said it will consult on the form and function of the Digital Markets Unit in early 2021 and legislate as soon as parliamentary time allows.
According to the statement, “it could be given powers to suspend, block and reverse decisions of tech giants, order them to take certain actions to achieve compliance with the code, and impose financial penalties for non-compliance”.
The government said that it will work closely with regulators including Ofcom and the Information Commissioner’s Office to introduce and enforce a new code to govern the behaviour of platforms that currently dominate the market, such as Google and Facebook, to ensure consumers and small businesses aren’t disadvantaged”. The fact that Google and Facebook had their names mentioned leaves no doubts about the priorities of the upcoming DMU.
Their role is recognised:
“Online platforms bring huge benefits for businesses and society. Their services are making work easier and quicker and help people stay in touch with one another. Millions of people share creative content or advertise their small business’ goods online”.
And the threats as well:
“There is growing consensus in the UK and abroad that the concentration of power amongst a small number of tech companies is curtailing growth in the tech sector, reducing innovation, and potentially having negative impacts on the people and businesses that rely on them.
The new code will set clear expectations for platforms that have considerable market power – known as strategic market status – over what represents acceptable behaviour when interacting with competitors and users”.
Under the new code, said the announcement, platforms including those funded by digital advertising “could be required to be more transparent about the services they provide and how they are using consumers’ data, give consumers a choice over whether to receive personalised advertising, and prevented from placing restrictions on their customers that make it hard for them to use rival platforms”.
National secretaries who signed jointly the announcement were aligned in their views.
Business Secretary Alok Sharma said:
“Digital platforms like Google and Facebook make a significant contribution to our economy and play a massive role in our day-to-day lives – whether it’s helping us stay in touch with our loved ones, share creative content or access the latest news.
But the dominance of just a few big tech companies is leading to less innovation, higher advertising prices and less choice and control for consumers.
Our new, pro-competition regime for digital markets will ensure consumers have choice, and mean smaller firms aren’t pushed out.”
Digital Secretary Oliver Dowden said:
I’m unashamedly pro-tech and the services of digital platforms are positively transforming the economy – bringing huge benefits to businesses, consumers and society.
But there is growing consensus in the UK and abroad that the concentration of power among a small number of tech companies is curtailing growth of the sector, reducing innovation and having negative impacts on the people and businesses that rely on them. It’s time to address that and unleash a new age of tech growth.
An eye on “unfair terms, conditions or policies to news publishers“
The code could be used to ensure platforms are not applying unfair terms, conditions or policies to certain business customers, including news publishers, highlights the announcement:
“Currently, dominant online platforms can impose terms on news publishers that limit their ability to monetise their content – severely impacting their ability to thrive.
The new code will govern commercial arrangements between publishers and platforms to help keep publishers in business – helping enhance the sustainability of high-quality online journalism and news publishing in the UK.
It will form a major part of the government’s work to support the sustainability of the UK’s world leading news publishing sector and make sure, as news moves ever more online, publishers get a fair deal from the platforms on which they rely”.
CMA’s Market study
“The Unit will be informed by the work of the Digital Markets Taskforce, which was set up earlier this year to provide advice to the government on the potential design and implementation of pro-competitive measures – including the methodology which will determine what companies should be designated as having strategic market status, and how a regime would work in practice”.
In 2018, the UK government commissioned the Digital Competition Expert Panel, chaired by Professor Jason Furman, which proposed a new pro-competition regime for digital platform markets in its final report, the Furman Review. The Government accepted the Furman Review’s six strategic recommendations, including the establishment of a new Digital Markets Unit (DMU), earlier this year.
The CMA concluded that “a lack of competition in these markets leads to harms to consumers and businesses” through:
Reduced innovation. The report argues that a lack of competitive pressure on Google and Facebook results in reduced innovation and inhibits the development of new, valuable services for consumers.
Higher prices for goods and services. The report provides evidence that businesses are facing higher prices on the dominant platforms (which are passed through to consumers). CMA analysis shows that in the UK both Google and Facebook are consistently earning profits well above what is required to reward investors with a fair return. Google earned £1.7 billion more profit in 2018 than the benchmark level of profits. For Facebook, the comparable figure for 2018 was £650 million.
Reduced quality. The number of adverts that consumers are exposed to on digital platforms is increasing. Adverts seen per hour on Facebook rose from 40-50 in 2016 to 50-60 in 2019. In 2016, Google increased the maximum number of adverts displayed following a search query and moved these to the centre of the page above organic results.
Lack of consumer control. The report argues that consumers would have more control over the collection and use of their data if there was more competition in digital advertising markets. The CMA highlights that search and social media markets are characterised by “take it or leave it” terms that mean consumers have to share their data with platforms to use services. In a competitive market, one would expect services to compete to offer better terms to consumers who prefer not to share their data.
Broader social harm. The CMA also set out evidence of broader harms due to weak competition, such as the negative impact on the quality of journalism, in line with the findings of the Cairncross Review.
MOW against Google Privacy Sandbox
The announcement of the DMU was made on the same week that a coalition of technology and publishing companies asked the Competition and Markets Authority (CMA) to delay a major technology release by Google that would “cement its dominance of online business – and frustrate bids by regulators around the world to ensure fair competition on the internet”.
The letter sent by Marketers for an Open Web, which presents itself as a “campaigning against Google’s attempts to control the open web”, states that the ” so-called ‘Privacy Sandbox’ technology will remove login, advertising and other features from the open web and place them under Google’s control”:
“Google’s dominant Chrome browser and Chromium developer tools (which together run on about 72% of UK computers) are currently being modified to give Google even greater control over how publishers, advertisers and other digital businesses can operate on the web. These changes, known as ‘Privacy Sandbox’ are scheduled for full implementation in early 2021.
Critics say that, despite its name, Google’s new technology has nothing to do with privacy, and everything to do with moving the whole digital advertising industry off the open web, where it supports numerous innovative technology businesses and allows publishers and advertisers to optimise revenue by dealing with the most efficient partners – and into the walled garden of its Chrome browser, where it would be beyond the reach of regulators.”
MOW states that” the changes will deny news publishers access to the cookies they use to sell advertising, thereby cutting their revenues by an estimated two-thirds*, with smaller regional titles hardest hit, journalist’s jobs lost, and reliable, fact-checked online news under greater threat than ever.
It reminds that the CMA, The US Department of Justice and the European Commission have all recognised that Google has dominant power over key parts of the web value chain and are in the process of developing or proposing long term competitive remedies to mitigate that. Therefore, MOW’s letter asks “for the introduction of Privacy Sandbox to be delayed until such measures are put in place”.
James Rosewell, Director of MOW, said:
“The world’s regulators have realised that Google is attempting to take over the web through its dominance of areas such as search, online advertising and browser technologies. However, their efforts to mitigate this monopoly power will be in vain if Google manages to consolidate its dominance through the introduction of Privacy Sandbox prior to the regulators’ recommended changes to the law being implemented. If Google releases this technology they will effectively own the means by which media companies, advertisers and technology businesses reach their consumers and that change will be irreversible”
“The concept of the open web is based on a decentralised, standards-based environment that is not under the control of any single commercial organisation. This model is vital to the health of a free and independent media, to a competitive digital business environment and to the freedom and choice of all web users. Privacy Sandbox creates new, Google-owned standards and is an irreversible step towards a Google-owned ‘walled garden’ web where they control how businesses and users interact online.”
The CMA have not responded immediately, but the move received extensive media coverage.
Luciana Gurgel is a Brazilian journalist based in London. She begun her editorial career at O Globo, one of the leading Brazilian media organisations. Later she founded (along with Aldo de Luca) Publicom, a successful corporate communications agency, acquired in 2016 by Weber Shandwick (IPG Group). In London, she has been working as news correspondent for Brazilian media – MyNews Channel, J&Cia – to which she writes a weekly column on trends and issue related to the news industry. The column originated a separate platform, MediaTalks, headed by Luciana from London as Editor-in-Chief.