Web giants risk damaging democratic society, CMA chief says

Web giants risk damaging democratic society by acting as ‘vectors for fake news and disinformation’ and allowing ‘sharing of illegal and abusive material’ warns head of UK’s competition watchdog

  • Andrea Coscelli said a ‘small number’ of very large digital firms have become ‘extremely powerful’
  • The head of the Competition and Markets Authority (CMA) was outlining work of new Digital Markets Unit
  • It was set up in April to oversee a planned new regulation regime for internet giants
  • Dr Coscelli also said there is ‘real concern’ about the impact which some firms have on democracy
  • Said they are vulnerable to ‘exploitation by bad-faith actors and their role as a vector for fake news and disinformation’ 
  • Web giants such as Facebook and Google risk damaging the democratic process and often have ‘little regard’ for users’ privacy or the harm caused by their platforms, the boss of the UK’s competition watchdog has said.

    In a major online speech on Thursday, Andrea Coscelli said a ‘small number’ of very large digital firms have become ‘extremely powerful’ and made it very difficult for potential rivals to challenge them.

    The head of the Competition and Markets Authority (CMA) made the remarks as he outlined the work of the new Digital Markets Unit, which was set up in April to oversee a planned new regulation regime for internet giants.

    He claimed that big firms have ‘fortified’ their positions and often give ‘little regard to data privacy considerations, fair and reasonable terms or wider harms’, whilst being ‘largely unconstrained’ because of the absence of a competitive market.

    In what appeared to be a reference to Facebook, Dr Coscelli also said there is ‘real concern’ about the impact which some firms have on the ‘democratic process’, because of their ‘vulnerability to exploitation by bad-faith actors and their role as a vector for fake news and disinformation’.

    Researchers in the U.S. revealed in September that both far-left and far-right misinformation on Facebook gets six times more likes and shares than factual posts.

    And, in highlighting how the internet can potentially harm society – including with the ‘sharing of illegal and abusive material’ – he referenced this month’s killing of Conservative MP Sir David Amess.

    ‘The digital sphere also carries a range of other potential harms for society, including the sharing of illegal and abusive material and its potential impact on mental health, particularly of young people as we were sadly reminded yet again 2 weeks ago with the killing of the British Member of Parliament, Sir David Amess,’ he said.

    Sir David’s killer Ali Harbi Ali is believed to have ‘self-radicalised’ online by seeking out extremist material.

    Web giants such as Facebook and Google risk damaging the democratic process and often have 'little regard' for users' privacy or the harm caused by their platforms, the boss of the UK's competition watchdog has said

    Web giants such as Facebook and Google risk damaging the democratic process and often have ‘little regard’ for users’ privacy or the harm caused by their platforms, the boss of the UK’s competition watchdog has said

    Dr Coscelli, who was speaking online as part of the ‘Beesley’ lecture series, made his remarks after Facebook whistleblower Frances Haugen made a series of bombshell claims about her former employer during a hearing in Parliament this week.

    She alleged that bullying ‘follows’ children home from school because it takes place on the platform; said Facebook wants to ‘hook’ younger users and claimed the platform is ‘unquestionably’ making online hate worse.

    Dr Coscelli began his speech by highlighting how the average Briton now spends an average of four hours a day online and that digital markets have become ‘critical’ for economic growth.

    Competition and Markets Authority chief Andrea Coscelli said big firms have 'fortified' their positions and often give 'little regard to data privacy considerations, fair and reasonable terms or wider harms'

    Competition and Markets Authority chief Andrea Coscelli said big firms have ‘fortified’ their positions and often give ‘little regard to data privacy considerations, fair and reasonable terms or wider harms’

    ‘And this is why it causes grave concern when digital markets are not working as they should,’ he said.

    ‘We can see increasing evidence that the competitive forces in some digital markets are weakening. A small number of very large firms now hold extremely powerful positions in key digital markets.

    ‘They have built and entrenched their market power on the back of powerful network effects which make them extremely difficult for new entrants to challenge.’

    He said firms like Google and Facebook buy start-up competitors to help maintain their market power and also ‘set the terms and conditions’ to which businesses have to agree to access the market.

    ‘They decide how to use consumers and businesses data, often with little regard to data privacy considerations, fair and reasonable contract terms or wider harms,’ he added.

    ‘And they can exercise this great influence largely unconstrained by competitive forces.’

    Earlier this month, the CMA fined Facebook £50.5million for breaching an order imposed during an investigation into its purchase of GIF platform Giphy.

    The CMA said Facebook deliberately failed to comply with its order.

    However, Dr Coscelli said on Thursday that the fine amounted to just 15 hours’ worth of profits for Facebook.

    He said it had become ‘increasingly clear’ that the CMA’s existing tools to respond to competition concerns in digital media are ‘not sufficient for the task’.

    Backing up his argument about the need for change, Dr Coscelli said that, of the 400 acquisitions made by the largest digital firms between 2008 and 2018, none had been blocked by the CMA and other competition authorities around the world.

    He said firms like Google and Facebook buy start-up competitors to help maintain their market power and also 'set the terms and conditions' to which businesses have to agree to access the market

    He said firms like Google and Facebook buy start-up competitors to help maintain their market power and also ‘set the terms and conditions’ to which businesses have to agree to access the market

    ‘There is now a general consensus that some of these acquisitions should not have gone ahead and that they allowed these firms to amass and reinforce their market power,’ he said.

    The CMA chief highlighted how his organisation had opened an investigation into efforts made by Google and Amazon to combat fake and misleading reviews on their platforms.

    ‘This work builds on the undertakings we secured from Facebook in October 2020 to tackle hidden advertising by social media influencers on its Instagram platform, and the commitments secured from eBay, Facebook and Instagram to tackle the trading of fake online reviews on their platforms,’ he said.

    ‘It simply isn’t enough for platforms to take a passive stance where they only deal with illegal material when drawn to their attention – they need to develop systems that detect such material and then remove it or suppress it – and then ban or sanction those responsible.

    ‘Consumers will not participate freely in digital markets if they cannot trust the information they are presented with.

    ‘Furthermore, allowing such reviews is unfair on law-abiding businesses, who face competitive disadvantages.’

    Dr Coscelli also outlined the CMA’s proposals for a new regime of regulation for the largest digital firms.

    They include an enforceable code of conduct which would set out what he called the ‘rules of the game’ to prevent firms from ‘taking advantage of their powerful position’.

    Dr Coscelli, who was speaking online as part of the 'Beesley' lecture series, made his remarks after Facebook whistleblower Frances Haugen (pictured) made a series of bombshell claims about her former employer during a hearing in Parliament this week

    Dr Coscelli, who was speaking online as part of the ‘Beesley’ lecture series, made his remarks after Facebook whistleblower Frances Haugen (pictured) made a series of bombshell claims about her former employer during a hearing in Parliament this week

    The CMA’s Digital Markets Unit (DMU) would also have the power to block web giants’ takeovers of smaller competitors, to prevent the stifling of competition.

    The code of conduct would also seek to stop large digital firms from ‘taking advantage of their powerful positions’, such as by ‘exploiting users or excluding competitors’.

    The regime will be overseen by the DMU and backed by Government legislation.

    Dr Coscelli added: ‘Taken together, these changes aim to swing the pendulum back towards protecting consumers and providing a digital economy in which competition and innovation can thrive.’

    He made his speech just hours after Facebook boss Mark Zuckerberg announced that the firm was changing its name to Meta as it seeks to distance itself from mounting scandals including the claims made by Ms Haugen.  

    Meta refers to the ‘metaverse,’ Zuckerberg’s vision for the company’s transition into shared augmented reality, where uses work and play in virtual world environments.

    The attempt to escape reality couldn’t come at a better time for the embattled brand, which will retain the Facebook name, but Facebook Inc. – the parent company that also owns Instagram and WhatsApp – will now go under the new title Meta. 

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