UK's Competition and Markets Authority has started an investigation that concerns the very core of Google's and Facebook's business model – the digital ad market.
This market is worth more than $16 billion in the UK.
Since Google and Facebook are projected to control over 70 percent of the market in 2020, with their business accused of a lack of transparency, this has set off alarm bells with UK's competition regulators.
As part of the probe, the Competition and Markets Authority will also look into the two giants' practices when it comes to collecting and using personal data of users – and whether those users are “able and willing” to have any say in the process.
One of the things the authority will be investigating is “whether making this data available to advertisers in return for payment is producing good outcomes for consumers.”
The goal of the probe is to reveal to the public and the British parliament how the likes of Google and Facebook go about their business of data collection and monetization and to find out if their advertising market dominance was harming competition.
The results of the investigation will then “influence the direction of policy and regulation in the digital sector,” said Competition and Markets Authority's Chief Executive Andrea Coscelli.
The probe is being launched after recommendations from Jason Furman, a Harvard professor who in the past served as US President Barack Obama's chief economic adviser.
Furman found that Google and Facebook had a lion's share of the digital ad market in the UK, and recommended a formal study.
The investigation will put even more pressure on the tech giants, with Facebook potentially once again in trouble in the UK after it was fined last year over the handling of user data in the Cambridge Analytica case.
Now a member of UK's shadow cabinet, Tom Watson, says that “for far too long, the digital market has been dominated and distorted by data monopolies.”
Watson accused these global behemoths of operating outside the bounds of accountability and placing themselves above the law and wants the government to amend and strengthen rules protecting competition in order to create a level playing field for all participants.