UK competition watchdog accepts Meta’s proposed changes to advertising data use

Meta’s new approach to handling advertiser data is Approved by the UK Competition and Markets Authority. This comes ahead of the introduction of a new digital market competition regime that will give it more powers to curb monopolistic behavior by big tech companies.

In addition to approving Meta’s commitments, the CMA is also closing its existing competition law case. Google Play Store and Apple App Storelaunching in 2022 and 2021, respectively. The agency is concerned that requiring apps on these platforms to use Google and Apple’s respective in-app purchase billing systems would harm competition.

In response, Google did propose alternative payment methods, but the CMA rejected these because they would still result in developers paying high commissions and could be off-putting to users due to the use of pop-up screens.

CMA in a Press release Its new regime, the Digital Markets, Competition and Consumer Bill, will enable it to investigate “more comprehensively” potential anti-competitive behavior by Google, Apple and other tech companies.

The rules “will build on and draw on experience from areas it has already studied, such as the mobile ecosystem, including app stores.”

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How Meta’s new ad data promise came about

Investigation of Meta Available in June 2021Because the CMA is concerned that the company’s data practices could give the platform an undue competitive advantage.

Initially, Mark Zuckerberg’s company allowed advertisers to opt out of having their data used to power the Marketplace’s algorithms. However, the updated rules eliminate the need for this opt-in or opt-out process, ensuring a more level playing field for advertisers using Facebook Marketplace.

As of 2022, Meta has more than 10 million active advertisers The company told the CMA that it had digital advertising revenues of £4bn to £5bn in the UK in 2021, making it the largest digital display advertising provider in the UK. It therefore had a dominant market position that could not be abused under the prohibitions of Chapter II of the Competition Act 1998.

Meta collects data from its digital advertising services and Facebook Login, a single sign-on API for third-party websites. The 2021 investigation aims to find out whether Meta uses this data to provide an unfair advantage to its own services (including Facebook Marketplace) and in violation of the Competition Act.

“For example, data obtained from a user’s interaction with an ad on Facebook could allow Meta to understand whether a user was interested in a particular product, such as sneakers, and could then in turn decide to show a user a listing for shoes when they opened the Facebook Marketplace tab,” the CMA said in a statement. Press release.

In response to the CMA’s concerns, Meta submitted a series of promise This will prevent it “Exploiting” its advertisers’ data May 2023. These include:

• Provide advertisers with the ability to opt out of having their advertising data used to develop or operate Facebook Marketplace. This includes data about how users interact with their ads, as well as data that can indicate to Meta which products or services users are interested in.
• Limit the use of advertising data that can identify advertisers to develop Meta products, and confirm this commitment to advertisers through official statements in its code of conduct.

In November 2023, the CMA accepted these commitments, but Meta voluntarily submitted a variation in April 2024. The proposed variation would have allowed Meta to restrict the use of certain data of all advertisers in the development or operation of the Marketplace.

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This will give the company another way to enforce the data controls outlined in the original commitment, and all Marketplace advertisers can be sure their data is not being used to benefit the platform without having to opt in or out.

The CMA consulted on the commitments in May and June this year and announced its acceptance of them on 20 August.

Amazon also launched Commitment to CMA The European Union banned the company in 2023 after an investigation into whether it abused its power as Britain’s leading online marketplace, including by banning it from using data from third-party sellers to gain an unfair advantage.

While Meta’s conflict with UK authorities ended amicably, the same cannot be said for the EU and its investigation into Meta’s potential anti-competitive practices. In July, the European Commission ruled that Meta’s ad-free subscription plan created a “pay or consent” advertising model. Violation of the Digital Markets Act.

The Commission believes that the “pay or consent” model “forces users to agree to the integration of their personal data and fails to offer them a less personalized but equivalent version of the Meta social network.” statement.

This practice is also anticompetitive because it uses Meta’s dominant position to limit consumer choice and make it more difficult for competitors without large pools of data to compete in providing targeted advertising services.

Established in 2022, the DMA is an EU regulation designed to promote fairness and competition between digital products and services.

What is the Digital Markets, Competition and Consumer Act?

The DMCCA is a law that aims to regulate the behavior of large digital companies with significant market power. The bill was approved back in 2020, but due to various delays, it was not passed by Parliament until April 2023.

It gives the CMA new powers to impose requirements on tech companies with a “strategic market position”, reminiscent of The Gatekeepers Must comply DMA in the EU.

The CMA did not accept Google’s commitments regarding the Play Store, suggesting it would be one of the first companies to receive this status. If the commitments had been accepted, this would have limited the actions the CMA could take against Google under the DMCCA.

While there are similarities, the new legislation is not as one-size-fits-all as the DMA. Under the DMCCA, the CMA can apply bespoke regulations, so-called “Behavioral requirements”Solving specific problems for companies in strategic market positions.

According to the CMA, the legislation is expected to come into force “later this year”.