There is no doubt that tech giant companies Facebook and Google are usurping a lot of space in our digital world, and they are using their giant stature to dominate the market. Their dominance results in sidelining the smaller companies and businesses, and this all brings a disadvantage for the consumers.
The UK is not okay with this anymore!
According to Reuters, the UK is all set to impose some new rules from next year to prevent Google and Facebook from dominating and abusing their power in the market that may lead to unwanted circumstances.
The competition analysts of Britain, an entity known as The Competition and Markets Authority (CMA) is now going to introduce a code that will keep both these tech companies within their limits.
Under these new implications of the code, these tech companies, and all the platforms that are funded by digital advertising will have to provide more transparency proofs regarding all their services. They have to provide all the information about how they use consumers’ data and whether they give consumers any choice before targeting them to personalized ads or not? Many such platforms put restricting rules to prevent their users from using other competitor platforms, so, under this new code, this restriction will also have to stop. As per the UK government, these measures are important to support smaller businesses and the growing industry. It will also restore the balance between platforms and publishers.
This code will also have an impact on the media industry. Much of its advertisement revenues have been usurped by these tech companies, so this code will try to bring a balance in this situation also. It will try to prevent these online digital platforms from imposing the news publishers with unfair terms that restrict them and cause hurdles in the monetization of their own content.
The Digital Markets Unit that will start working from April 2021 will be given the authority to block, suspend, and even revert some decisions made by tech companies. They will even have the authority to penalize with monetary fines if these tech companies do not comply with their terms and conditions.
The CMA has reported that Google and Facebook spent almost 80% of their 14 billion pounds budget on online advertisement in 2019
14 billion pounds means almost $18.7 billion, and almost 80% of this huge amount was spent on online advertisements last year. According to an analysis by CMA, both these tech firms in the UK are earning profits more than their fair share of returns that all investors are rewarded with. In 2018, Google earned almost 1.7 billion pounds revenue which was way above the level of profits for other companies. Facebook earned around 650 million pounds back then.
It is common knowledge that almost 70-80% of the total revenue these companies generate comes from advertisements. According to CMA’s analysis, ads seen per hour on Facebook have been consistently rising from 40 to 50 ads per hour in 2016 to 50 to 60 ads per hour in 2019. This means that the average revenue per consumer through ads is ten times higher than all its rivals’ apps and platforms.
Google also rearranged its ad placement in the search results and made it more centralized to generate more organic results. Besides this, in the UK, Google charges around 30 to 40% more for ads on desktops and mobiles than Microsoft Bing.
Although the digital industry brought almost 150 billion pounds profit to the economy of the UK in 2018, still the UK has decided to keep the two most profitable US companies in check. The reason was that there was a growing concern amongst people these two companies are getting all the market dominion which is pushing down and affecting the growth rate of other smaller and newer companies. This is diminishing the innovative powers and negatively affecting people and businesses.
Both Google and Facebook have agreed to continue working in compliance with the UK government’s rules and regulations for digital advertising, and have agreed to give more control to the users with more transparency in terms of their data and how they are targeted for advertisements.
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
