CULTURE & MEDIA

GOOGLE and Facebook are facing two new probes into their “opaque” advertising business amid Government fears that they are making it impossible for online news publishers to survive.

. See also The demise of the printed press?

Culture Secretary Jeremy Wright said he had written to the Competition and Markets Authority (CMA), asking the watchdog to investigate the “digital advertising market” and see whether it prevents “fair competition”.

And he announced a formal probe by the Department for Digital, Culture, Media and Sport into how online advertising is regulated.

He also took aim at the BBC, calling on regulator OFCOM to consider opening a formal investigation into the size of its online news website. He asked the media watchdog to look at whether the broadcaster is “striking the right balance” between pushing its own content and driving traffic to commercial news websites.

The investigation comes after a damning report said online journalism is “at risk” because of the stranglehold the web giants have on the online advertising business.

The Cairncross Review, commissioned by the Prime Minister, and led by Dame Frances Cairncross, called for the CMA and OFCOM inquiries as it warned that Google and Facebook have become too powerful and too secretive.

At the moment, online news providers struggle to make ends meet because Google and Facebook hoover up so much of every pound spent on advertising on news websites.

The web giants keep their algorithms – the computer codes that dictate the order of search results – closely guarded secrets, but even the smallest changes can have a huge impact on the amount of traffic news websites receive and their ability to make money from their content. Google and Facebook control so much of the online advertising market that they can simply “impose terms on publishers”, Dame Frances said.

Mr Wright has now thrown his weight behind her report. In a Commons debate about the review, he said: “Online advertising represents a growing part of the economy and forms an important revenue stream for many publishers.

“But this burgeoning market is largely opaque and extremely complex, and therefore it is at present impossible to know whether the revenue shares received by news publishers are fair.”

He said the CMA probe would “examine whether the online marketplace . . . enables or prevents fair competition”.

Mr Wright added that his own department will conduct a review into “how online advertising is regulated”.

Some Conservative backbenchers have called for even more draconian measures. Former Tory leader Iain Duncan Smith said the social media giants need to be “broken up”. “This kind of monopoly cartel is damaging to people as individuals, and damaging to the functioning democratic society”, he said.

Sir Edward Leigh MP, said: “I think we’re being weak with these American tech giants . . . they are a monopolistic, anti-competition force in our society.”

In her review, Dame Frances said the web giants should have to sign up to a new code of conduct – overseen by a regulator – to ensure they deal with publishers fairly, and Google and Facebook should disclose how much of every pound spent on online advertising reaches the publisher.