Most consumers are unaware of how they are being manipulated when they buy things online, whether that’s skewed results on search or opaque pricing. The CMA is the consumer champion when it comes to digital. Yet its work also extends to tech business mergers, investigating algorithms and, increasingly, how Web 3.0 will affect all of us.
Stefan Hunt joined the Competition and Markets Authority (CMA) as chief data and technology insight officer back in 2018 to better understand the impact that data, machine learning and other algorithms have on markets and people.
His DaTA team of nearly 50 data scientists and engineers help the competition and consumer regulator decide when tech firms are treating digital customers unfairly. It’s not an organisation without teeth: last October Facebook was fined £51m for breaching an order imposed by the CMA during its investigation into Facebook’s purchase of Giphy.
Information Age sat down with Stefan to better understand how the CMA uses data when it comes to investigating market distortion, whether it’s skewed results on search, or a planned merger such as the one between chip manufacturer ARM and Nvidia (subsequently called off) actually hurts the market, and manipulating consumers when it comes to digital advertising and pricing.
What is the role of the CMA chief data officer? And why was the data team set up back in 2018?
Our CEO and the executive team appreciated how firms had a much better grip on technology than the CMA did. This was an area we needed to improve.
Our first area of expertise is dealing with consumer challenges in digital markets. Right now we’re dealing with Google on their Google privacy sandbox, which is how they’re getting rid of third-party cookies. Another one is our fake and misleading online reviews case. Or maybe it might be a merger case.
Ultimately, there’s going to be a bunch of remedies or undertakings are going to get quite specific and quite technical. At the start of a case, it’s just trying to understand how firms operate internally. It’s really useful to have people with a data and technology background to know what questions to ask. And that just enables the CMA to deal better with challenges in markets.
So these are all dealing with challenges in markets. Oftentimes, firms may or may not want us to get involved, but we think there’s a problem in the market. And we think we need to solve that problem.
So your north star is, is the consumer and how the consumer is impacted?
Yes. Now that can often be through competition.
Could you describe the different functions of the CMA’s DaTA unit?
There are actually five things that the team does.
The first thing we do is provide expert data and technology advice for different cases. So we mentioned the Google privacy sandbox and fake and misleading online reviews. Another really good example is the Meta/Giphy merger, where we’ve decided that there’s a number of really important ways that the market could be harmed. And that was a case where one of our talented data scientists got involved. And he really tried to understand how Giphy deals with data and Meta could use that data. Second thing that we do is data acquisition and data science. So we’re dealing with sort of getting in big data, handling it and doing analysis on it
Another good example is the digital advertising market study we published July 2020. In order to really understand what was going on in search, we got one week of all Google searches in the UK and one week’s worth of all searches on Bing, which is the second biggest search engine in the UK. And then we were able to match across Google and Bing and understand the kind of data advantages that Google had. And that was some really important cutting-edge analysis.
But the CMA wouldn’t have been able to do that without our data team. We’re also building any data we’re using repeatedly into data pipelines, so that we can actually do things more efficiently there. We’re doing some scraping as well. So that makes sure that we’re just really informed as an agency.
The third thing that we do is data-driven tool development. That’s in our internal digital transformation bucket. We built what we call our evidence submission portal for firms. When it comes to a merger case, where sometimes we might have to get millions of documents. For instance, in the ARM/Nvidia merger case, we took in seven million documents, for example. And we built something that automatically accept those documents, check they were all in the right format, that they haven’t been submitted incorrectly, and if they have, it rejects them. It used to take four days in a merger case just to upload documents in a merger case. We’ve got that down to one day.
The fourth thing is behavioural science. Our mobile ecosystems market study digital advertising used it a lot. But we also did a whole load of work on auto renewals and subscription traps, really understanding how inflation was being presented to consumers.
Our fifth and last thing is research horizon scanning and case pipeline development. We did a lot of work about algorithms for the Digital Regulation Cooperation Forum (DRCF). We also did an algorithms paper in January last year. And we just came out with a bunch of work on online choice architecture.
Those are the five things that we do.
How does this affect business? We’re building our capability in cases to really help the CMA better understand firms and asking more probing questions. We’re building up our capability to just be informed through data.
In terms of business sectors under most scrutiny, sell, sustainability is an issue, as has been the cost of living crisis.
What are the areas or issues that the CMA is most concerned about when it comes to data and digital? Is it privacy or is it data misuse?
One of the concerns for firms of all sizes – from larger firms through to smaller firms as well – are things that firms may be doing intentionally or otherwise, maybe leading consumers to make choices which aren’t in the consumers’ best interests. So that’s something where we’re thinking quite a bit about at the moment, especially in the context of the cost of living crisis. We’re looking at drip pricing. Anything we can do that will decrease what consumers are having to spend at the moment is obviously going to be a positive.
And I mentioned online choice architecture work, which is obviously digitally focused, sometimes at small firms.
We certainly have a watching brief on algorithms and ticket pricing algorithms and firms’ uses of algorithms. We pay quite a bit of attention to that. If we see things that we are sufficiently concerned about, we will take it forward.
You investigate data from big tech firms such as Google and Meta. Basically, you’re asking to poke around the crown jewels. How responsive or helpful are they or do they say, that’s none of your business?
We have quite strong information gathering powers. So they can’t just say no. Meta got a £50 million fine from us when they refused to do a bunch of things. Firms vary a lot in their strategies for regulatory engagement.
What challenges does Web 3.0 hold from a consumer champion point of view?
It’s not the case that Web 3.0 is just allowing everything to be completely decentralised.
One of the issues is with smart contracts and that only the parties to the contract actually see details of the contract, which could enhance cartels. The perception is that Web 3.0 is all about decentralisation but in fact centralisation tends to go in different areas. Let’s say, you’ve got a digital wallet. You’re almost certainly not going to be someone who holds a primary copy of the distributed ledger. You’re going to have your own digital wallet that needs to be protected. There’s a bunch of firms that provide that to you. But those firms that offer that digital wallet protection are quite concentrated.
Tech is so fast moving and changes so quickly. As a watchdog, aren’t you always playing catch up?
We are very focused on being very pro innovation. Large firms that buy up smaller companies may actually stifle innovation, which is going to bad for consumers.
Or when it comes to mergers, we ask what is the effect on innovation if we allow two firms to merge? As an agency, we can get involved in markets we can make innovation better. Not through innovating ourselves, but by making sure market structures exist.
Our mission ultimately is about making things work better for UK citizens and that’s a really motivating thing.
Do you think that consumers are aware of how their digital experience, whether it’s search or what they buy, can be manipulated?
No. Vague awareness but not when it comes to the individual purchasing decisions they make when buying online. Look, I’ve spent years understanding behavioural psychology, both professionally and in detail over the past 10 years plus I’ve been thinking about it more broadly for the past 25 years, and even I’m not fully aware of how I’m being manipulated online. Yes, people have a vague awareness, which contributes to a lack of trust in markets and a sense that firms push and pull the rug out from under them. That’s why we’re doing online choice architecture work. Our work is partly to help consumers have more faith in markets.
What’s the one thing the CMA would like to get across to CTOs, maybe not the Facebooks or Googles, but the next level down, the unicorns or the soonicorns?
We would really welcome engaging with you to the extent that we can in cases going forward.
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