DCMS Report Calls for CMA Probe into Digital Advertising Market
The Digital Culture Media and Sport Select Committee called for a Competition and Markets Authority investigation into online advertising and for the extension of VAT zero rating for online digital newspapers and magazines in its final report on Disinformation and ‘fake news’ published on Monday.
The DCMS Committee specifically endorsed the Cairncross Report’s recommendations for action, following close upon the Culture Secretary’s representations: “We welcome Dame Frances Cairncross’s report on safeguarding the future of journalism, and the establishment of a code of conduct to rebalance the relationship between news providers and social media platforms. In particular, we welcome the recommendation that online digital newspapers and magazines should be zero rated for VAT, as is the case for printed versions. This would remove the false incentive for news companies against developing more paid-for digital services. We support the recommendation that chimes with our own on investigating online advertising, in particular focussing on the major search and social media companies, by the Competitions and Markets Authority.”
On publication of the Cairncross Report last week, the Culture Secretary confirmed to Parliament that he would be discussing its VAT zero rate proposals with the industry and Treasury. Additionally, he has written to the CMA supporting its undertaking a market study into the digital advertising market and stated that the DCMS would itself conduct a review of online advertising regulation.
The Select Committee also called for the Government’s White Paper on online harms to consider the creation of a new category of tech company, neither platform nor publisher; the tightening of social media platforms’ legal liabilities; a Compulsory Code of Ethics for tech companies and take down requirements, overseen by an independent regulator with powers to take legal action for breach; and reforms of electoral law.
The Code of Ethics proposed would outline what institutes harmful or illegal content. Financial penalties would be handed out to social media companies that breached the code by failing to remove offensive material.
The system recommended was similar to Germany’s new “Facebook law”, where social media companies can be fined up to €50 million for failing to remove hate speech within 24 hours.
The report also warned that UK electoral law had failed to keep pace with online campaigning. The report called for “absolute transparency” in online political campaigning, including making available details on the source and funding of all political ads on social media.
It suggested that the Information Commissioner’s Office should investigate Facebook’s practices surrounding the use of users’ data. This included the capability to check what data was being held on a user, as well as access to the tech companies’ algorithms and mechanisms to “ensure they are operating responsibly.”
The Culture Secretary is due to meet Facebook founder, Mark Zuckerberg, in California this week, following Mr Zuckerberg’s refusal to come to the UK to answer questions from the Select Committee. The Government has said it would respond formally to the DCMS Select Committee’s report.