This presentation by Simeon Thornton, Director, UK Competition and Markets Authority, was made during the discussion “Line of business restrictions and competition concerns” held at the 69th meeting of the OECD Working Party No. 2 on Competition and Regulation on 8 June 2020. More papers and presentations on the topic can be found out at oe.cd/lobr

1. Online platforms and digital
advertising market study:
interim report
8 June 2020
Simeon Thornton, CMA Director
OECD Hearing on Line of Business Restrictions

2. Context for the study
2
● Many calls for CMA to undertake market study into digital
advertising (Select Committees, Ministers, Cairncross, Furman, Which?)
- Lack of transparency and conflicts of interest in b 2 b digital advertising markets,
intermediaries taking excessive proportion of revenue
● Concerns around online platforms (Furman, Stigler, Cremer)
- Characteristics: economies of scale, network effects and tipping,
- Stronger ex ante regulatory regime to address concerns around market power
● Twin high-level objectives of study:
- Use info-gathering powers to investigate substance of concerns in markets within
scope and propose remedies as required
- Inform Government thinking on regulatory reform in relation to platforms, particularly
in context of response to Furman Review by providing a more detailed assessment
of case for reform for platforms funded by digital advertising

3. Scope and progress
3
● Market studies: holistic assessments of how well markets are working
- Information gathering powers
- Where problems found propose remedies to address them
- Outcomes can include recommendations to Government, enforcement or market
investigation
● The scope of the study is focussed on three broad related themes:
1) to what extent online platforms have market power in consumer-facing markets
such as search and social media;
2) whether consumers have adequate control over their data; and
3) whether competition in the digital advertising market is affected by a lack of
transparency, conflicts of interest or market power held by platforms
● Progress
- Launched study on 3 July 2019
- Interim report published 18 December 2019
- Final report to be published by 2 July 2020

4. Value of digital advertising in UK
(2018)
4

5. Issues
5
● Search and search advertising
- Google over 90% share of search and search advertising for last ten years
- Barriers to entry and expansion: economies of scale in click and query data;
payments to be default search engine (around £1bn in UK in 2018); unrivalled
access to data through consumer services, tags and Android devices
● Social media and display advertising
- FB over 75% of the time spent on social media for a number of years, and a share
of [40-50%] of display advertising
- Barriers to entry and expansion: network effects; API access and interoperability;
access to data; economies of scale
● Open display advertising
- Google high market share in various intermediary services, including over 90%
share of publisher ad server
- Concerns: conflicts of interest, vertical integration and lack of transparency
● Consumer control over data
- most consumers would like to control access to their data, but control is limited:
social media platforms do not allow consumers to turn off personalised advertising
- engagement with privacy controls very low (long and complex T&Cs, privacy
settings difficult to navigate) : defaults are highly influential

6. Overview of potential interventions
6
Wide range of potential remedies discussed in IR. Support for principle of pro-
competitive ex ante regime but no firm conclusions on specifics
● Use consultation to seek views on case for and form of interventions
● Potential interventions cover wide range of ‘line of business’ restrictions – from
transparency to behavioural interventions to structural separation
Code of conduct to govern behaviour of platforms with significant market power
● Potential for more rapid intervention than traditional antitrust to address concerns
before competition irrevocably harmed
● Greater clarity to platforms as to appropriate behaviour
● Regulatory body would need power to order platforms to comply with findings
Series of potential interventions to address specific concerns under themes 1 to 3
● Include data-related and structural interventions
● Generally aim to tackle sources of market power
● Some very significant interventions – need to consider costs and benefits carefully

7. A code of conduct: principles
7
Principle Examples of concerns that could
be investigated
Principle 1: Fair trading.
Platforms should offer services on fair terms: including
pricing, non-price terms, requirements to share data, and
restrictions on how customers can use services.
• Data gathering from business customers
• Consumer data extraction
• Unfair balance of power between publishers
and platforms
Principle 2: Open Choices.
Platforms which operate across multiple markets should
offer consistent terms to allow consumers and business
customers a fair choice between their own services and
their competitors.
To support more effective competition in markets,
platforms should offer interoperability with their core
services
• Bundling competitive services with ‘must
have’ services
• Unfair restrictions on competitors
• Self-preferencing / undue prominence to own
products
• Restrictions on interoperability
Principle 3: Trust and Transparency.
Platforms should provide sufficient information to users,
both consumers and businesses which transact with the
platform. Platforms should be open and transparent in how
they operate their core services.
• Changing how core services work without
due notice (eg algorithms)
• Lack of transparency in digital advertising
• Conflicts of interest
• Choice architecture encouraging consumers
to share too much data

8. Potential interventions to address sources of
market power
8
● Search:
- Third party access to click and query data
- Mechanisms for determining default search engine on devices and browsers,
including potential requirement to offer choice screens to consumers and rules
regarding their design / potential restrictions on ability to buy default positions
● Social media: mandated interoperability over particular forms of
functionality (eg cross posting, find friends)
● Open display:
- Transparency : more effective ad verification and attribution, fees etc, scrutiny of
decision making and algorithms by regulatory body
- Options for structural separation to address conflicts (eg Google ad server) ….

9. The ‘ad tech stack’
9
Google’s roles in advertising intermediation

10. Options for solving conflicts of
interest in open display
10

11. 11
Open Banking – UK Update
8 June 2020
Dr Bill Roberts
Head of open banking
Competition and Markets Authority
London

12. (a) set up and pay for an organisation, the open banking implementation entity (OBIE), tasked
with agreeing, implementing and maintaining open and common open banking standards.
Consumers, Fintechs, SMEs and Challenger Banks were to be represented on its steering group;
(b) fund a suitably qualified, independent person (the Implementation Trustee), as chair of the
Implementation Entity with responsibility to the CMA for the delivery of the project’s objectives;
(c) use their best endeavours to achieve the objectives of the project within the timetable agreed
with the CMA;
(d) agree to be bound by the decisions of the Implementation Trustee in the absence of
consensus;
The CMA required the leading banks to
Implementation strategy
• CMA could not specify standards in advance: this was the function of the
Trustee
• No disagreements on technical standards (JSON, FAPI, O Auth, ID Connect):
arguments have been over scope and have been commercial rather than over
choice of technology
• Adopted a ‘minimum viable product’ approach to development
• Set timetable at the pace of the faster moving banks (and lived with breaches
of the Order arising from missed deadlines)

13. 13
Open Banking - Adoption
• Banks
• 9 major banks (and the 4 biggest have
all launched aggregators)
• 100 smaller/challenger banks
• 99% provider/account coverage
• FinTechs
• c 80 active in production
• c 300 in the pipeline
• Consumers
• API volume usage was 3 million calls in
July 2018, 400 million in March 2020
• Over 1 million active users and growing
at about 20% per month

14. Adoption internationally
The drivers of adoption vary between jurisdictions (competition, fostering the FinTech
sector, financial inclusion) but the agenda is the same. The UK is unusual, however, in
compelling the adoption of common, open API etc standards. In the majority of cases
adoption is voluntary (though possible with the threat of compulsion in reserve)

15. 15
• Compulsion or the threat of it will generally be necessary to implement
open banking or similar initiatives successfully and within a reasonable
timeframe.
• The Trustee/SPV model worked well
• There may be risks in allowing individual banks discretion over the
way they interpret certain requirements or in leaving this in the
“competitive space.”
• With a project of this complexity and ambition, results will not be
achieved overnight.
• Regulators should prepared to
• countenance launching a “minimum viable product.”
• set deadlines that do not allow all banks to proceed at the pace of
the slowest
Learnings