The competition watchdog has launched an inquiry into online platforms such as Facebook and Google to “lift the lid” on how they collect and use personal data.
The Competition and Markets Authority (CMA) study, ordered by chancellor Philip Hammond in March and part of a wider digital markets strategy, will consider the monopoly power of the firms, the way they collect and use data and whether there is enough competition in the digital advertising market.
The CMA said it will make detailed recommendations to Government if its probe uncovers evidence of any problems in the market.
An independent review conducted earlier this year by former Obama adviser Jason Furman raised concerns about the dominance of tech giants and said the market suffered from a lack of transparency.
CMA chairman Andrew Tyrie said: “It is our job to ensure that companies innovate and compete. And every bit as much, it’s our job to ensure that consumers are protected from detriment.
“Implementation of the Furman Report should help a lot. As part of the work announced today, we will be advising Government on how aspects of Furman can most effectively be implemented.
“Much about these fast-changing markets is a closed book to most people. The work we do will open them up to greater scrutiny, and should give Parliament and the public a better grip on what global online platforms are doing.
“These are global markets, so we should and will work more closely than before with authorities around the world, as we all consider new approaches to the challenges posed by them.”
The probe comes amid concerns over Google and Facebook’s dominance over the £14 billion digital advertising market.
In his report commission by the Chancellor, Mr Furman – Barack Obama’s former chief economist – recommends a competition unit is created and backed up with legal powers to help users maintain more control over their data online and more easily switch between platforms and services.
It also urges the creation of a code of conduct and the strengthening of regulatory powers to tackle anti-competitive behaviour.
The review also recommends changes to merger rules so that the CMA is better equipped to stop mergers that are considered likely to damage future competition or consumer choice.
The review said if the proposals were adopted it could help boost the economy by encouraging the development of new platforms alongside established names.
CMA chief executive Andrea Coscelli said: “The CMA has already made great strides in our efforts to protect people online, including securing a victory for holidaymakers using hotel booking sites and cracking down on social media influencers who are not upfront with their followers about being paid to promote a product.
“The market study will help us further lift the lid on how major online platforms work, especially how they collect and use personal data, how they monetise their content through digital advertising, and what this means for competition.
“The findings from this work will be used to influence the direction of policy and regulation in the digital sector.”