Google, Meta, TikTok and other companies in the online advertising industry may face a new regulatory landscape in the United Kingdom as a result of new legislation, the creation of a new regulator and even enforcement actions.
The government will close a public consultation on its Online Advertising Program June 8, which may result in stricter online advertising rules. Currently, the placement of online advertising in the U.K. is overseen by the Advertising Standards Authority (ASA), which lacks enforcement powers and is governed under a system of self-regulation. Given the increasing number of scams and promotions of fraudulent products, the government is looking at potential changes in the existing regulation and how to properly fund regulators to combat harmful advertising.
One interesting view is that irrespective of the new regulatory approach to be adopted, the responsibility will not only fall under platforms such as Meta, TikTok or Twitter, but also on the intermediaries in the online ad chain, such as Google, TheTradeDesk and AppNexus.
The three options foreseen in the consultation are to continue with a self-regulatory approach with a few new requirements for intermediaries, publishers and platforms; to introduce a statutory regulator to backstop the self-regulatory approach who would only intervene when the sanctions available to the ASA don’t go far enough to ensure compliance; and to create a new regulator with more powers.
While the government didn’t say explicitly which option it would choose, there are references in the report suggesting that the government may prefer to have a new regulator with strong enforcement powers. For instance, on this third option, the document stated: “This is likely to be the most effective approach for increasing accountability in addressing illegal harms like fraudulent advertising … as criminal enforcement powers would likely be necessary for some of the measures required to address such activity.”
If the government chooses this policy option, it will create a new regulator empowered to take appropriate actions, including rulemaking powers, sanctions, blocks and bans, and investigative powers to request data, audit companies or undertake investigations.
The consultation doesn’t provide any estimated timeline for a decision, but its fate may be closely tied to the Online Safety Bill, which also contains provisions to prevent fraudulent paid advertising.
If the Online Safety Bill is approved, it will require the largest and most popular social media platforms as well as search engines to prevent paid fraudulent adverts appearing on their platforms. Under the current draft of the Online Safety Bill, Big Tech already has an obligation to protect users from fraud committed by other users. But a last-minute change added to the bill put the focus on fraudulent paid advertisements, whether they are controlled by the platform itself or an advertising intermediary. This includes ads with unlicensed financial promotions, fraudsters impersonating legitimate businesses and ads for fake companies.
While the online advertising program is just in a consultation stage, the Online Safety Bill is already in second reading in the Parliament, and depending on the outcome, it may pave the way for secondary legislation on the online advertising industry.
CMA Online Advertising Probe
The Competition and Markets Authority (CMA) was the first regulator in the U.K. that investigated the online advertising industry and raised concerns about some practices that could be anticompetitive. This research fed the public consultation on the Online Advertising Program and the proposed changes.
Nonetheless, the CMA didn’t stop at this research. It launched a new investigation into Google’s advertising technology practices Thursday (May 26), the second in as many months.
Read more: UK Launches Second Probe of Google Ad Practices
The CMA said that the investigation will focus on demand-side platforms (DSPs), which let advertisers and media agencies buy publishers’ advertising inventory, and ad exchanges, which offer technology to automate inventory sales.
The actions taken by regulators and legislators are mostly complementary. Whereas the CMA focuses on anticompetitive practices, the Online Safety Bill and the Online Advertising Program focus on practices that may cause fraud and harm to consumers.
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