NMA Welcomes Lords Committee Calls for CMA Investigation Into Digital Ad Market

The News Media Association has welcomed the House of Lords Communications Committee report calling on the competition authorities to carry out an investigation into the digital advertising market and the dominance of the major tech platforms. 

Published on Wednesday, the Select Committee’s report ‘UK advertising in a digital age’ recommended that the Competition and Markets Authority should conduct a market study of digital advertising “to investigate whether the market is working fairly for businesses and consumers.”

Responding to the report, NMA chairman David Dinsmore said: “The NMA and the news media industry been calling for an urgent investigation by the CMA into the impact of Google, Facebook, and the digital advertising supply chain on news media providers for the past year so this recommendation is most welcome.

“News media publishers create huge value for the tech platforms but are not able to reap the appropriate commercial rewards. It is quite right that this imbalance should be investigated, with a view to establishing a digital ecosphere in which the content creators are fairly rewarded for their investment in journalism.”

In its submission to the Lords inquiry, the NMA said that the value chain of the digital news environment was unfairly skewed in favour of those who aggregate and distribute content at zero cost, to the detriment of publishers who produce it at considerable financial and legal risk. 

“The great beneficiaries from this decoupling are the tech platforms who are believed to be capturing the lion’s share of the spoils from digital advertising. Figures compiled by analysts and trade bodies consistently point towards Google and Facebook commanding around 60 per cent of the digital ad spend and nearly 100 per cent of growth in this area.”

This, the NMA added, was despite the fact that nearly half of material shared and linked to on social media in the UK comes from newsbrand websites, according to data from NewsWhip.

“The disparity in rewards reflects the market dominance of Google and Facebook – sometimes referred to as the “duopoly” – in their respective domains of search and social and their resulting ability to dictate the terms of interaction with publishers. It does not reflect the amount of value that journalism creates for these platforms.”

Published on Wednesday, the Communications Committee’s report says: “The digital advertising market is dominated by a small number of very large companies. These companies maintain that they do not abuse their position and that the market remains highly competitive.

“But given the lack of transparency, we recommend that the Competition and Markets Authority investigates this market to ensure that it is working fairly for consumers and other businesses. As the Government proceeds with the work of its Digital Charter we recommend that it review whether competition law is appropriate for the 21st century digital economy.”

The section on market dominance recommends: “The lack of transparency in the digital media advertising market hinders the ability of advertisers to ascertain whether they receive value for money. This is in part caused by the superfluity of ad tech intermediaries, but Google alone has control at all levels of the market.

“We recommend that the Competition and Markets Authority (CMA) should conduct a market study of digital advertising to investigate whether the market is working fairly for businesses and consumers.

“As the UK leaves the EU, we call upon the Government to ensure that the CMA is properly resourced to take on the burden of cases that would otherwise be dealt with by the European Commission.

“Consumers do not pay for free online services, but in exchange they must give up their data. 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. We recommend that the Government should use the Digital Charter to gather evidence on this issue.”