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1、Online platforms and digital advertising Market study final report 1 July 2020 Crown copyright 2020 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc
2、/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psinationalarchives.gsi.gov.uk. The Competition and Markets Authority has excluded from this published version of the market study report information which it considers should be
3、 excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by . Some numbers have been replaced by a range. These are shown in square brackets. Non-sensitive wording
4、 is also indicated in square brackets. 3 Contents Page Summary . 5 Introduction . 6 What are our findings? . 9 The case for a pro-competition regulatory regime for platforms . 21 Decision on a market investigation and further CMA work . 30 Summary of recommendations . 34 1. Introduction . 35 Context
5、 . 35 Evidence gathering . 38 This document . 39 2. Overview . 42 Introduction . 42 The business model of platforms funded by digital advertising . 43 Search, social media, and their ecosystems . 51 Digital advertising markets . 57 Market outcomes . 62 Implications for consumers . 68 3. Competition
6、in consumer services . 73 Introduction . 73 Competition in search . 74 Barriers to entry and expansion in search . 89 Googles expansion into related markets . 109 Findings in search . 112 Competition in social media . 114 Barriers to entry and expansion in social media . 131 Facebooks expansion into
7、 related markets . 144 Findings in social media . 146 4. Consumer control over data . 149 Introduction . 150 Consumer use of online platforms . 151 How consumers can benefit from social media and search . 153 The role of consumer data in digital advertising . 155 The relevant legal and regulatory fr
8、amework . 159 Consumers understanding and attitudes about the use of their data . 162 Consumer engagement with privacy policies and controls . 171 Our concerns about consumer control . 177 Consumer choice over personalised advertising . 181 Platforms choice architecture . 194 Conclusions . 209 5. Co
9、mpetition in digital advertising . 211 Introduction . 212 Characteristics of digital advertising markets . 213 Competition in search advertising . 222 Competition in display advertising. 242 Competition in open display . 262 Cross-cutting issues: data, transparency and publisher relationships with t
10、he platforms . 290 6. Harm to consumers from weak competition . 309 4 Introduction . 309 Reduced innovation and quality . 310 Price paid for goods and services . 313 Poor returns to consumers . 316 Privacy and data collection . 318 Broader social harms . 318 Conclusions on harm to consumers . 321 7.
11、 The case for a pro-competition regulatory regime . 322 Introduction . 322 Overview: development of a pro-competitive regulatory regime . 324 Code of conduct for online platforms with strategic market status . 328 Pro-competitive interventions . 349 Conclusion and recommendations . 356 8. Interventi
12、ons in search, social media, and digital advertising . 358 Introduction . 359 Interventions in search . 360 Interventions in social media . 369 Interventions to give consumers greater control over their data . 375 Interventions in digital advertising markets . 394 Conclusion . 418 9. Decision on a m
13、arket investigation reference . 420 Introduction . 420 The consultation. 421 Developments since our consultation . 424 Our decision . 426 10. Further work by the CMA . 429 Introduction . 429 Digital Markets Taskforce . 429 International engagement . 430 Engagement with the ICO . 433 Potential CMA in
14、terventions using our markets and enforcement powers . 436 Concluding the market study . 437 5 Summary Platforms funded by digital advertising provide highly valuable services, allowing people to find information in an instant and connect with family and friends from around the world all at no direc
15、t cost to the consumer. Google and Facebook are the largest such platforms by far, with over a third of UK internet users time online spent on their sites. Google has more than a 90% share of the 7.3 billion search advertising market in UK, while Facebook has over 50% of the 5.5 billion display adve
16、rtising market. Both companies have been highly profitable for many years. Both Google and Facebook grew by offering better products than their rivals. However, they are now protected by such strong incumbency advantages including network effects, economies of scale and unmatchable access to user da
17、ta that potential rivals can no longer compete on equal terms. These issues matter to consumers. Weak competition in search and social media leads to reduced innovation and choice and to consumers giving up more data than they would like. Weak competition in digital advertising increases the prices
18、of goods and services across the economy and undermines the ability of newspapers and others to produce valuable content, to the detriment of broader society. The concerns we have identified in these markets are so wide ranging and self- reinforcing that our existing powers are not sufficient to add
19、ress them. We need a new, regulatory approach one that can tackle a range of concerns simultaneously, with powers to act swiftly to address both the sources of market power and its effects, and with a dedicated regulator that can monitor and adjust its interventions in the light of evidence and chan
20、ging market conditions. We are therefore recommending that the government establish a pro-competition regulatory regime for online platforms. A Digital Markets Unit (DMU) would be empowered to enforce a code of conduct to govern the behaviour of platforms with market power, ensuring concerns can be
21、dealt with swiftly, before irrevocable harm to competition can occur. The DMU should also have powers to tackle sources of market power and increase competition, including powers to increase interoperability and provide access to data, to increase consumer choice and to order the breakup of platform
22、s where necessary. We have identified a wide range of specific interventions that the DMU could introduce under this regime to tackle the market power of Google and Facebook, from ordering Google to open up data to rival search engines and separate aspects of its open display advertising business, t
23、o requiring Facebook to increase its interoperability with competing social media platforms and give consumers a choice over whether to receive personalised advertising. We are now taking forward further advice on the development of this pro-competition regulatory regime through the Digital Markets
24、Taskforce. 6 Introduction 1. This is the final report of the CMAs market study into online platforms and digital advertising. Digital advertising plays an important role in the provision of hugely valuable services and content to consumers, including internet search, social media and news journalism
25、. Consumers typically do not pay directly for these services rather, platforms and publishers finance them by using consumers attention and data to sell targeted digital advertising. In turn, for a wide range of firms, from the largest conglomerate to the local caf, digital advertising provides a hi
26、ghly effective method of delivering ads that are relevant to consumers, helping to drive brand awareness and sales. 2. The main types of digital advertising are search advertising, in which sponsored ads are provided in response to users search queries, and display advertising, in which static or vi
27、deo ads are displayed alongside the content a user is interested in. Currently, Google generates almost all search advertising while Facebook has a strong position in display advertising. Alongside the owned and operated platforms of Google and Facebook there is an open display market in which publi
28、shers such as online newspapers compete in real time to sell advertising inventory to advertisers. Each of these forms of digital advertising requires a relevant ad to be selected and served to an individual consumer in a fraction of a second an extraordinary technological feat that was not possible
29、 only a few years ago. Scope and objectives 3. This market study has assessed how well the markets for search, social media, and digital advertising are working, and the role of Google and Facebook within them. We have focussed our work on three high-level issues: to what extent Google and Facebook
30、have market power in search and social media respectively and the sources of this market power; whether consumers have adequate control over the use of their data by online platforms; and whether a lack of transparency, conflicts of interest and the leveraging of market power undermine competition in digital advertising. 4. In addressing these issues, we have aimed to inform the broader debate on the regulation of online platforms, as explored in the Furman and Stigler 7 Center reviews.1 These reviews concluded that relying solely on existing competition law was not