CMA Announces UK Digital Advertising Market Study

On 03 June 2019, the Competition and Markets Authority (CMA) announced the commencement of a formal Market Study into online platforms and the UK market for digital advertising.

What is the Study about?

The Study is broad in scope and aims to examine three potential sources of harm in connection with the digital advertising market: i) to what extent online platforms have market power in user-facing markets and what impact this has on consumers; ii) whether consumers are able and willing to control how data about them is used and collected by online platforms; and iii) whether competition in the digital advertising market may be distorted by any market power held by platforms.

The CMA has commenced the Study in order to establish what types of regulatory reform are required to address these potential sources of harm.

To whom is the Study relevant?

The market for digital advertising is complex and consists of a wide variety of market participants. Whilst advertisers and media agencies sit on the demand side of the market, publishers and other inventory sellers sit on the supply side. The two sides of the market are supported by intermediaries that provide technology, data and other services which enable programmatic trading. The Study is therefore likely to be relevant to a number of different stakeholders across organisations that operate within digital online markets.

Note that the scope and applicability of any consequent reform is unlikely to be limited to ‘dominant’ platforms: instead, firms that have a ‘strategic’ role within a market (ie a lower threshold than that of a ‘dominant’ firm under typical competition rules) are likely to fall within the remit of any regulatory reform. For that reason, stakeholder engagement in the Study is likely to be a priority for many firms.

What are the potential outcomes?

Where a market is not found to be working well, the CMA may consider taking action, including changes to regulation or enforcement action. The CMA has identified five following areas in which it may take action on completion of the Study:

  1. Increased competition though data mobility, open standards and open data
  2. Giving consumers greater protection in respect of their data
  3. Limiting large platforms’ ability to exercise market power
  4. Improving transparency and oversight for digital advertisers and content providers, and
  5. Institutional reform.

How can your organisation input into the Study?

The CMA has called for input in response to the Study by 30 July 2019. In particular, the CMA is keen to gather views in relation to market shares, the price of advertising, and how revenues are distributed along the advertising value chain.

Next Steps

The CMA will publish an interim report with initial findings by 02 January 2020 and its final report no later than 02 July 2020.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.