CMA Report: More Speed Required

On 1st July the UK Competition and Markets Authority (CMA) published their recommendations following a year long examination of the digital advertising landscape, with a focus on the dominant players Google and Facebook.

A summary of their findings and links to the full report can be found here and a good summary from New Digital Age is here. But in short they want to put a task force together to:

  • Enable and enforce a code of practice that provides a remit for platforms, with a position of power, to not engage with exploitative or exclusionary practices.
  • Restrict Google being the default search engine choice. 
  • Order Google to open up its click and query data, so that other search engines are able to adapt their algorithms to that of Google.
  • Allow social media platforms to have a degree of interoperability with each other.
  • Launch a Fairness-by-Design duty on the platforms, which will give greater power to consumers to make informed choices on what they agree to, such as personalised advertising.

The Pros and Cons of Market Domination

Overall it is difficult to say these steps are a bad thing. Google’s monopoly on search has allowed them to increase costs for advertisers, and raise barriers to entry for alternative providers to block off the market. And Facebook’s dominance in the social media industry has well documented implications as wide reaching as the foundations of democracy itself. The position of both allows them a level of arrogance to make decisions based on their own profit margin and share price with no consideration for broader impact.

But equally it is hard to argue they haven’t both contributed to the advancement of technology and connectivity to the better of a lot of society. Android took on the might of Apple and their operating system powers the majority of the low cost smartphone market. Facebook, for all of their ills, provide a platform for connecting people like none seen before.

There are strong arguments to say their dominance is both a bad, and a good thing.

What impact will the CMA have?

I am in no doubt the government and CMA are going to make a lot of noise about the possibility of imposing restrictions on them as the task force comes together. But what real chance have they got?

So far they have spent 12 months to decide something should be done, and some guidance on what. They now have a timeline of 6 months to formalise how they do that, before it goes to a government to discuss bringing in legal restrictions. How long will that take?

We are talking about tech businesses that are used to working at high speed, making rapid decisions and moving their business forward. I doubt there is a significant decision either business has made that will have required 12 months of investigation followed by 6 months of further deliberation.

Meeting Speed with Speed

If governments are going to effectively restrict and control large tech from running rings around them, they need to learn to operate at the same speed. Normal practices need to be dropped, and agile decision making and rapid iteration need to become part of the solution.

In the current scenario all that has been achieved is Google Facebook were given an 18 month head start, with further time to get things in order in the event any of the recommendations become UK Law.

History and competition theory tells us that the draw back of large organisations is their size and inability to adapt. Whilst this may not be the case with Google and Facebook, it still remains that the way you beat large organisations is with speed and agility. Moving faster than them and being adaptable as new challenges arise. The current process being adopted by CMA (and all government trying to take on Google and Facebook) needs to adapt to thinking of themselves as the challenger. Otherwise they will always remain 2 steps behind.

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