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UK competition watchdog mulls tougher ad rules for Facebook, Google

The United Kingdom's competition watchdog could impose stricter regulations on digital advertising in a bid to reduce Facebook Inc. and Alphabet Inc. unit Google LLC's search and data monopoly.

In a report outlining its latest findings on the U.S.-based big tech firms, the Competition and Markets Authority, or CMA, warned that the companies' dominance in online advertising could be causing harm to consumers, businesses and the media.

Google in 2018 accounted for more than 90% of all revenue earned from search advertising in the U.K., at around £6 billion, the report found. Facebook accounted for almost half of all display advertising revenue in the U.K., reaching more than £2 billion.

Both companies have used their data and search dominance to train their algorithms to provide better services than their rivals, the CMA said. Their approach to data privacy and partnerships with hardware companies are also having a direct impact on consumer choice and competition, the watchdog added.

For instance, the CMA found that Google paid around £1 billion — 16% of its total 2018 search revenues — to be the default search engine on mobile devices such as Apple Inc.'s iPhones. For its part, Facebook does not allow users to opt out of targeted advertising on its main social network, forcing them to share considerable personal data in return for using its free service, the CMA said.

Following consultations with industry stakeholders, the watchdog is considering regulatory proposals aimed at increasing data privacy, and transparency in digital advertising.

Potential measures include opening up access to click and query search data and limiting Google's ability to be the default search engine on devices and browsers; forcing Facebook to connect more seamlessly with rival social networks; addressing the conflicts of interests in digital advertising and requiring platforms to allow people to turn off ad targeting.

The CMA will begin further consultations on the findings ahead of publishing its final report next year. It will then present its recommendations to the government to help shape its approach to regulation.

Both Google and Facebook said that they will continue to work with the government and CMA as part of the consultations process.

According to the Financial Times, the government is to create a technology regulator next year that will impose a code of conduct on companies including Facebook and Google.

The U.K. in April recommended establishing a separate regulator that will police online services for extremist content, with punishments including fines for sites that do not swiftly remove offending material.