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Study on the competition conditions in the online advertising sector in Spain

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Digitalisation is having a deep effect on the advertising sector, creating new goods and services and causing the entry of new players and new media channels. This has produced substantial efficiencies, such as improved personalisation of ads and better data on campaign`s performance. CNMC estimates that online advertising has grown at double digits in Spain in the last few years, to reach an income of 3,450 million euros in Spain in 2019 – a figure that is higher than the income of all non-digital media combined in Spain. These trends are similar to other advanced economies.

The online advertising sector presents competition challenges that may ultimately harm consumer welfare, through higher prices, less choice or greater data requirements on firms and consumers from online advertising suppliers.

Firstly, this sector is concentrated in a few players, with Google and Facebook estimated to account for more than 70% of revenues in Spain. By segments, Google has more than 90% of income in search advertising and between 50% and 70% in the various open display intermediation services, while Facebook can account for more than 40% of revenue in display advertising. Concentration is a consequence of the essential role of data in this sector, since it is key to personalise ads and optimise advertising campaigns.

Secondly, there is opacity and lack of transparency. Advertisers, agencies and medium-sized publishers receive insufficient information to optimize their decision-making, in favour of certain operators, particularly vertically integrated ones. Opacity may also entail the discriminatory imposition of certain conditions or technical standards that unduly restrict interoperability.

Thirdly, there are risks of competition-distorting behaviour due to the high levels of integration and concentration registered in the sector, that could facilitate the extension of market power from one market to another (leveraging) or discrimination in favour of one’s own services (self-preferencing).

To address those challenges, the CNMC presents a series of recommendations in our Market Study, which are complementary and, therefore, should be jointly implemented. First, competition authorities must keep enforcing competition policy continuously and decisively in this market as the first line of defence against anticompetitive conducts. Second, competition policy tools should be complemented by specific regulation on digital platforms. Third, national and EU legislators must consider the complex relationship between privacy protection and the promotion of competition in digital markets in order to empower consumers and ensure their maximum welfare. Fourth, institutions should adopt a multidisciplinary and cooperative approach. Finally, regulatory and competition authorities need to reinforce their capacities and means to face the challenges posed by the digital economy.

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