Spring Statement: Britons could get more control over online data

Chancellor Philip Hammond has today called for an urgent review of the digital advertising industry today following an independent review of the influence of huge technology firms including Apple, Google and Facebook.

Speaking during his Spring Statement, he asked the Competition and Markets Authority to probe online advertising revenue ‘as soon as possible’ and added Britain would be a place where digital giants ‘pay their fare share’ and the public is ‘protected from online harm’.

The balance of digital advertising has been criticised for months. In 2017, UK the market was estimated to be worth £11.55billion, of which Google and Facebook combined earned around 54 per cent. 

It comes after Mr Hammond commissioned a report led by Harvard University Professor Jason Furman, former chief economic adviser to Barack Obama, who recommended a host of changes to the way individual consumers use digital platforms, including being able to transfer images and data between competing apps.

The report has also urged the biggest firms to agree to a new code of conduct to promote competition and avoid the need to end monopolies by breaking those companies up. 

It is unclear which firms would be considered ‘tech giants’ outside of the big six – Google, Apple, Facebook, Microsoft, Netflix and Amazon – but it will focus on social media and aggregation websites

It is understood an independent regulator would be set up to police the code and it will have powers to enforce rules, such as fines, although the exact punitive measures have not been decided yet. 

Prof Furman’s report comes a month after the Cairncross Review into the sustainability of journalism in the UK, which also recommended its own code of conduct to prevent tech firms from having too large a share of advertising revenue.  

Chancellor Philip Hammond, pictured giving the Spring Statement, has called for an urgent review of the digital advertising market by the Competition and Markets Authority

Chancellor Philip Hammond, pictured giving the Spring Statement, has called for an urgent review of the digital advertising market by the Competition and Markets Authority

Chancellor Philip Hammond, pictured giving the Spring Statement, has called for an urgent review of the digital advertising market by the Competition and Markets Authority

A review commissioned by Mr Hammond, pictured today, has urged the UK Government to introduce a new code of conduct for large technology firms that promotes competition and also gives consumers more control over their data

A review commissioned by Mr Hammond, pictured today, has urged the UK Government to introduce a new code of conduct for large technology firms that promotes competition and also gives consumers more control over their data

Former White House adviser Jason Furman, pictured, led the review and said social media users should be allowed to move their picture and message archives easily between competing apps

Former White House adviser Jason Furman, pictured, led the review and said social media users should be allowed to move their picture and message archives easily between competing apps

Meanwhile a review commissioned by Mr Hammond, pictured today left, has urged the UK Government to introduce a new code of conduct for large technology firms that promotes competition and also gives consumers more control over their data. It was led by Harvard University Professor Jason Furman, right

Among the key findings were: 

  • A code of conduct agreed between Big Tech firms to give users fair access to their services and not penalise them for using alternative platforms, enforceable by fines,
  • Allowing users to transfer pictures, message archives and other data between competing platforms,
  • Give consumers the ability to connect with each other between different apps such as Facebook’s WhatsApp to Apple’s iMessage, 
  • Increase scrutiny on mergers and review past takeovers such as Facebook’s acquisition of Instagram.

Mr Hammond will now consider the proposals with a response due in the summer.

It comes after months of criticism aimed at major tech platforms amid claims they have too much power over advertisers, are misusing personal data, not doing enough to prevent child exploitation and being used to spread misinformation to influence political campaigns.

Report calls for review of digital advertising market 

The Furman Review has urged the Competition and Markets Authority to launch a probe into the digital advertising market amid concerns Google and Facebook have too large a share of revenue.

In 2017, UK digital advertising spend was estimated to be worth £11.55 billion, of which Google and Facebook combined earned around 54 per cent. 

Last month’s Cairncross Review said the two sites domination of the market made it hard for traditional publishers and newspapers to survive in modern journalism. 

The Furman Review has called for an investigation claiming domination of the market could harm businesses and consumers alike.

The report said: ‘A lack of effective competition in the digital advertising market may lead to harm for consumers and businesses, for example through higher prices for advertisers, higher prices for consumers for goods and services that use digital advertising if these costs are passed through.’

It added: ‘It is clear that the market is opaque, with limited information disclosed either at an aggregate or an individual level. 

‘A thorough investigation of its workings, encompassing the entire value chain, would be helpful in either identifying any valid grounds for concern about effective competition, or dispelling the mistrust that exists.’ 

The CMA said it is considering launching a probe but claimed its ability to start an investigation was hampered by Brexit.

A spokesman said: ‘The CMA has also been considering whether to undertake work in the digital advertising market, as recommended today by the panel’s report. However, its ability to launch new projects is heavily dependent on the outcome of EU Exit negotiations.’ 

Calls have recently been made to break up Google to ‘create a competitive environment for search engines’ and concerns have also been raised over Apple and Amazon from their domination of their markets to the amount of corporation tax they pay.

But Prof Furman stopped short of calling for these firms to be broken up into separate companies, claiming it would make things ‘more uncertain and potentially risky’. 

The review urged the Chancellor to back up these proposals with legislation to ensure the new rules are followed and set an example to the rest of the world.

Prof Furman said: ‘These policies would create substantial benefits for UK consumers, businesses trying to start up and scale up in the UK, and greater predictability for the major digital companies. 

‘Effective implementation in the UK could also serve as a model for the many governments around the world wrestling with these same questions.’ 

He added: ‘The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation.

‘Some say this is inevitable or even desirable. I think the UK can do better.

‘The Chancellor, Philip Hammond, was right to recognise there is a better way than just continuing with the status quo.

‘My panel is outlining a balanced proposal to give people more control over their data, give small businesses more of a chance to enter and thrive, and create more predictability for the large digital companies.

‘These recommendations will deliver an economic boost driven by UK tech start-ups and innovation that will give consumers greater choice and protection.’

The review also recommends changes to merger rules so that the Competition and Markets Authority (CMA) is better equipped to stop mergers that are considered likely to damage future competition or consumer choice.

In addition, it calls for the introduction of powers that would force large companies to open up to smaller firms by providing access to certain data, where doing so would not affect user privacy.

It said if the proposals were adopted it could help boost the economy by encouraging the development of new platforms alongside established names.

In response, Mr Hammond said: ‘The UK leads the world in embracing technology and the opportunities it delivers for people.

‘Competition is fundamental to ensuring the market works in the interest of consumers, but we know some tech giants are still accumulating too much power, preventing smaller businesses from entering the market.

‘The work of Jason Furman and the expert panel is invaluable in ensuring we’re at the forefront of delivering a competitive digital marketplace.

What is the Cairncross Review?

Prof Furman’s report comes a month after the Cairncross Review into the sustainability of the Press in Britain and whether there is too much domination of advertising revenue by tech giants.

The review, led by former journalist and academic Dame Frances Cairncross, also said news aggregation sites including Google and Facebook had an ‘obligation’ to provide users with quality news to improve levels of trust in content.

It said that the power of online platforms like Google and Facebook captured the majority of online advertising revenues, making it hard for traditional publishers, such as newspapers, to compete effectively. 

To remedy this, the Cairncross Review also recommended a new code of conduct be created to ‘level the playing field’.

This code would be overseen by a regulator to ensure platforms do not impose their own advertising software on news publishers and would make firms be more transparent on their share of online advertising revenue and pledge to work together on how best to present news on the web.

The review concluded that after evidence of ‘market failure’ in the supply of public interest news, Government intervention may be the only solution.

‘I will carefully examine the proposals put forward by the panel before responding later this year, setting out how the Government will implement the changes needed to ensure our digital markets are competitive and consumers get the level of choice they deserve.’

Damian Collins MP, chairman of the House of Commons Digital, Culture, Media and Sport (DCMS) select committee also backed calls for tighter regulation.

‘I welcome the publication of Professor Furman and his expert panel’s report on unlocking digital competition.

‘Its central conclusions that digital markets only work well if they are supported with strong pro-competition policies, corroborates a number of the findings of my committee’s report into disinformation and ‘fake news’ published in February,’ he said.

‘It is clear that a strong code of ethics is needed to regulate online platforms, and I agree with the report’s conclusion that the proposed code of competitive conduct is complementary with the code of ethics suggested by my committee.

‘We welcome the measures put forward to tackle anti-competitive practices and bullying tactics by market leaders.

‘This comes at a critical moment ahead of the beginnings of regulation from Government to rein in the powers of the tech companies.

‘I agree with the report that common data standards, including around the treatment of inferred data, should be set.

‘My committee was concerned by the treatment of inferred data by large tech companies such as Facebook, and it is essential that the Government acts to protect consumers.

‘The report is right to highlight that United Kingdom has the opportunity to lead by example in the area of digital regulation.

Mr Hammond, pictured in Downing Street today ahead of the Spring Statement, welcomed the report and said he would review the recommendations before deciding whether to implement changes in the UK later this year

Mr Hammond, pictured in Downing Street today ahead of the Spring Statement, welcomed the report and said he would review the recommendations before deciding whether to implement changes in the UK later this year

Mr Hammond, pictured in Downing Street today ahead of the Spring Statement, welcomed the report and said he would review the recommendations before deciding whether to implement changes in the UK later this year

‘With a history of fair and robust regulation, and with the largest tech sector in Europe, the UK is uniquely placed to set world-leading standards in the digital arena.

‘Through the formation of the International Grand Committee it has already been demonstrated that other nations are ready to work with us to tackle the plethora of challenges presented by social media platforms.’

Later this month, a government white paper on online harms is expected to be published, which is likely to include some proposals for new regulation on social media platforms and internet companies.

What is the new code of conduct? 

The Furman report has suggested a new code of conduct to be agreed between major tech firms including Google, Amazon and Apple. 

It is currently unknown which firms would be subject to the code, how it would be enforced or what punitive measures would be.

But the principles have been laid out in the report and, if approved, businesses would have to:

  • Ensure users have access to platforms on a fair, consistent and transparent basis,
  • Be provided with rankings and reviews of apps on a fair, consistent and transparent basis
  • Be not unfairly restricted from, or penalised for, using alternative platforms. 

Prof Furman’s report comes a month after the Cairncross Review into the sustainability of the Press in Britain and whether there is too much domination of advertising revenue by tech giants.

The review, led by former journalist and academic Dame Frances Cairncross, also said news aggregation sites including Google and Facebook had an ‘obligation’ to provide users with quality news to improve levels of trust in content.

It said that the power of online platforms like Google and Facebook captured the majority of online advertising revenues, making it hard for traditional publishers, such as newspapers, to compete effectively. 

To remedy this, the Cairncross Review also recommended a new code of conduct be created to ‘level the playing field’.

This code would be overseen by a regulator to ensure platforms do not impose their own advertising software on news publishers and would make firms be more transparent on their share of online advertising revenue and pledge to work together on how best to present news on the web.

The review concluded that after evidence of ‘market failure’ in the supply of public interest news, Government intervention may be the only solution. 

It also recommended the creation of a new institute of public interest news, along the lines of the Arts Council, to channel a combination of public and private finance into those parts of the industry deemed most worthy of support.

Culture Secretary Jeremy Wright welcomed the review’s findings, saying that while some could be acted on immediately, others would require ‘further careful consideration’ with interested parties on the way forward. 

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