• by Sean Hargrave , Staff Writer, July 5, 2019

And lo, it came to pass that after much teeth grinding, machinations, empty-chairing of Zuckerberg in parliament and a general distaste in the UK for how the tech giants operate, the Competition and Markets Authority (CMA) is finally launching an inquiry into how digital advertising works.

The crucial point here is that the probe had been requested by the Chancellor back in February to lift the lid on digital marketing and see how the duopoly of Facebook and Google have managed to account for around two in every three pounds spent on digital advertising in the UK. 

The request came after a damning report from Jason Furman, Barack Obama’s former chief economic adviser. It said that way too much power was held by the duopoly and that an online digital watchdog, or something similar, needed to be created in Whitehall. This, he said, needed to be staffed by digital experts who understand the market and are equipped with the powers to enforce great competition.

Labour has been all over this issue, pointing out that the tech giants need to be reined in and greater competition must be enforced.

The obvious question is how. Surely the only way a watchdog could feasibly do this is to break up a company, but it's difficult to see how a UK competition watchdog could force American tech giants to split up. We've already seen the German equivalent of the CMA order Facebook to stop collating data between itself, WhatsApp and Messenger.

However, beyond asking Facebook to agree to what it has already promised to do, when given permission to buy WhatsApp, it's hard to see the lasting impact the CMA can make.

Sure, it can raise a huge fine, but the tech giants have plenty of cash. It could say the companies need to be structured in a different way, but is that really going to stop the dominance if there is no power to actually split them up?

It may come as little surprise that the news of the investigation came at around the same time as the Chancellor was asked by the CBI -- the voice of big business -- to drop the 2% Digital Sales Tax that will hit the tech giants from next April. 

I will suggest that this review by the CMA is more about standing up the reasons why the Chancellor felt compelled to take a lead on tax. Rather than wait for international agreements to curtail the tech giants in legally moving money around so tax is minimised to laughable proportions, he imposed an upcoming tax they cannot avoid. 

Whether the next Chancellor carries through with the next tax is something we will only know in due course. Philip Hammond knows only too well that he is almost certain to be replaced by the new Prime Minister within a month.

So I think this CMA inquiry is there to prevent the new Chancellor withdrawing the tax until he or she (my money's on Sajid Javid) has seen the watchdog's findings.

It would be easier to think the power of the tech giants could be challenged by investigations into their use of data by the ICO. It is in the middle of investigating Google and recently fined Facebook for pre-GDPR failings.

Forcing the tech giants to be more transparent about how they collect and use data would appear to be a way to bring them to heel.

Unfortunately, the cookie is as good as dead, and that can only benefit the two services most of us are permanently signed in with, Google and Facebook. 

It's hard to see, then, how the UK authorities can challenge the duopoly. Surely only the US authorities can split these companies up?

As the cookie crumbles, the internet will operate by device ID tagging and relying on people signing in automatically.

This can only benefit the duopoly as well as people inadvertently remaining signed in all day long to surf the net on Chrome, search on Google and watch cute cat videos on social media.