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Google and Facebook face fresh fines for dominating UK advertising space

TECH giants Google and Facebook are facing fines for dominating online advertising space, the competition watchdog has said.

The Competition and Markets Authority said UK expenditure on digital advertising was around £14 billion in 2019, with 80 per cent of it going to Facebook and Google.


Google makes up more than 90 per cent share of the £7.3 billion search advertising market in the UK, while Facebook has a share of over 50 per cent of the £5.5 billion display advertising market.

The CMA is concerned by the amount of power the pair have due to their large user base, making it impossible for rivals to compete on equal terms.

To reduce their power, it wants a new pro-competition regulation in place, backed by a code of conduct to ensure such platforms don't exploit customers or unfairly exclude rivals.

Looming over them should be threat of fines if necessary to make them comply.

'HIGHER PRICES'

"What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out," Andrea Coscelli, CMA chief executive, warned.

"People will carry on handing over more of their personal data than necessary, a lack of competition could mean higher prices for goods and services bought online and we could all miss out on the benefits of the next innovative digital platform."

The call comes after a year-long study found both companies had "unmatchable" access to user data, allowing them to target advertisements.

It also said they used default settings to nudge people into using their services and giving up their data.

The CMA warned the dominance was impacting newspapers and other publishers' revenues, leaving them reliant on Google and Facebook for almost 40 per cent of all visits to their sites.

It said a Google should open up its click and query data to rival search engines so they could improve algorithms and compete fairly.

There also needs to be restrictions the firm's ability to secure its place as the default search engine on mobile devices and browsers.

Meanwhile, Facebook should be made to increase its interoperability with other social networks, as well as offering users a choice over whether to receive personalised advertising.

Ronan Harris, vice president for Google UK and Ireland, said, the company supported “regulation that benefits people, businesses and society” and will continue to work with government.

"Digital advertising helps businesses find customers and supports the websites that people know and love,” he said.

"Advertisers today choose from a wide range of platforms that compete with each other to deliver the most effective and innovative ad formats and products.

A Facebook spokesman said it has introduced “industry leading tools” for people to control how their data is used to inform the ads they see.

"Providing a free service, funded by advertising that is relevant and useful, gives millions of people and businesses in the UK the opportunity to connect and share.

"We face significant competition from the likes of Google, Apple, Snap, Twitter and Amazon, as well as new entrants like TikTok, which keeps us on our toes.”

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Markets

Mandating coronavirus face masks would strengthen US economy: Goldman Sachs

Masks, public health measures key to economic recovery: Former CDC acting director

Former acting director of the Centers for Disease Control Dr. Richard Besser discusses how to convince more Americans to wear masks to curb the spread of the COVID-19 pandemic.

A national face mask mandate would slow the spread of COVID-19 and potentially prevent the reinstatement of lockdowns that would wreak havoc on the U.S. economy, according to Goldman Sachs.

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The daily number of new coronavirus cases reached a record 44,726 on Friday as a number of states including California, Florida and Texas experienced a surge in infections. Deaths and hospitalizations, meanwhile, are holding near their lowest levels since late March.

“The economic benefit from a face mask mandate and increased face mask usage could be sizable,” wrote a Goldman Sachs research team led by Chief Economist Jan Hatzius. Such an action, however, would lie well outside the authority of the White House; any executive order to do so would be unenforceable, serving merely as a recommendation.

Health officials have urged Americans to use the gear to curb the spread of COVID-19, but the items have become a political flashpoint, with some arguing they're unnecessary and refusing to don them.

TRUMP VS. BIDEN: STOCK MARKET WILL PICK THE WINNER

More widespread usage, though, might avert additional damaging stay-at-home orders. Also intended to rein in the pandemic, such measures forced nonessential businesses to shutter their doors beginning in mid-March, leading to the sharpest economic slowdown of the postwar era.

The U.S. economy shrank by 5 percent during the first three months of 2020 and is expected to have contracted by at least 30 percent during the second quarter. About 47 million Americans have filed first-time unemployment claims since the pandemic began.

The resurgence of the virus as lockdowns were lifted, however, has caused a number of states to slow their reopenings and sparked concern that some parts of the country would reinstate the closures.

Since the first wave of infections in March and April, it has “become clear that broad lockdowns are not the only way to lower virus transmission significantly,” Hatzius wrote.

The Trump administration issued a national “recommendation” in April that Americans wear a mask to help avoid COVID-19 transmission. The suggestion came after the World Health Organization said on March 30 that there was “no specific evidence” that wearing a mask provided any benefit.

Nearly 70 percent of Americans self-reported face mask usage in public, but that number varies from state to state, according to Goldman.

Statewide mandates for mask usage have raised the number of people who “always” or “frequently” wear masks by 25 percentage points and a national mandate could “increase U.S. face mask usage by statistically significant and economically large amounts” in states like Florida and Texas, the bank said.

Mask usage lowers the infection growth rate by 1.3 percentage points in the approximately two weeks following a mandate and reduces the death rate by 3.7 percentage points after a month, according to Goldman.

While Hatizus said a national face mask mandate could substitute for lockdowns that would cause a 5 percent drop in gross domestic product, the economic impact would be uncertain due to the firm’s analysis being based on a number of statistical relationships.

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Still, it “suggests that the economy could benefit significantly” from a national face mask mandate, Hatzius wrote.

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Economy

Some taxpayers face a desperate wait for refunds

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As a 58-year-old woman on disability, Robin Short of Wallingford, Connecticut, relies on her tax refund to catch up on bills. She filed her return electronically in February, opting for direct deposit so she could get her $773 refund quickly.

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DID PUSHING BACK THE TAX-FILING DEADLINE DO AMERICANS A DISSERVICE?

She’s still waiting, as are millions of others. The IRS is slowly resuming operations after pandemic-related lockdowns, but delayed refunds are devastating some people’s finances.

TAX REFUNDS HAVE BECOME A LIFELINE

Tax refunds, which last year averaged $2,979, are the largest single infusion of cash for about 30% of U.S. families, says Fiona Greig, consumer research director at the JPMorgan Chase Institute, which researches economic issues. While many Americans use refunds to save or to pay down debt, significant numbers rely on the money to cover bills or to get needed medical care — and that was true even before COVID-19 threw millions out of work.

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Delayed refunds can lead to evictions, hunger, creditor lawsuits and health problems from postponed medical care, among other ill effects. Many households live so close to the edge that they can experience hardship when a refund is delayed by two or three weeks, let alone several months, says John Thompson, chief program officer for the Financial Health Network, which researches financial challenges facing low- and moderate-income households.

“Not everybody has got the kind of flexibility or resilience to just be able to hold on,” Thompson says.

MOST IRS OPERATIONS SHUTTERED BY THE PANDEMIC

The IRS started shutting down tax return processing centers in March, along with its taxpayer help line, local offices and volunteer assistance programs. Soon after, it focused on sending out more than 159 million payments as authorized by the coronavirus relief package. By mid-May, the agency faced a backlog of 10 million pieces of unopened mail, including paper tax returns.

People who filed electronically generally got their refunds unless those returns were flagged, commonly because of identity theft concerns or a mismatch between the information on the return and what was provided by employers or financial institutions.

GOT YOUR STIMULUS CHECK BUT NOT YOUR TAX REFUND? IRS SAYS TO EXPECT DELAYS

In Short’s case, the TurboTax software she used counted a $3,800 annual pension payment twice, as both 1099 income and as W-2 income. The IRS sent her a letter about the error and advised her not to contact the agency for 60 days while the issue was resolved. Then, the lockdowns happened.

Short says her pension and monthly Social Security disability checks don’t cover her expenses. She makes arrangements to pay overdue bills, such as her power bill, when her refund arrives. Otherwise, she says, the math of living on a low fixed income gets grim.

“Either you miss a payment on the electric bill, or you don’t get your medicine,” says Short, a former facilities manager and insulin-dependent diabetic who was severely injured when her car was hit by a drunk driver.

USING REFUNDS TO CATCH UP

Putting off bills, then using tax refunds to catch up, is a common practice among strapped households, Thompson says. A survey of people who used free filing methods for lower- and moderate-income taxpayers last year found roughly half said they needed their refunds for bills, rent, groceries and other everyday expenses, according to Prosperity Now, a nonprofit that promotes financial security.

CORONAVIRUS COULD CAUSE NEW YORK TO RAMP UP AUDITS OF WEALTHY TAXPAYERS

People also increase their health care spending significantly after refund checks arrive. A 2018 study of 1.2 million checking account holders found health care spending rose 60% in the week after people received refunds, indicating many were catching up on care, Greig says.

It’s not clear how long it will take the IRS to address the backlog or when taxpayers can expect their money. People can try using the “Where’s My Refund?” tool on the IRS site or call the taxpayer help line, but getting through to a human is difficult even in normal times. Congress has cut the IRS’ budget by 20% since 2010, leading to a 22% reduction in staff, according to acting National Taxpayer Advocate Bridget Roberts. Without adequate staff, the agency answered less than one-third of its calls last year. Another option is to contact the Taxpayer Advocate Service, which has representatives in each state.

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Rather than wait for the IRS to return their money each year, taxpayers can adjust their withholding so they get more money in their paychecks. But many don’t feel comfortable changing their withholding in case they wind up owing big sums, Thompson says.

“You’d have to predict how the year is going to go,” Thompson says. “And what could we possibly predict about this year?”

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