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The UK should consider tougher rules for online giants such as Google and Facebook, the Competition and Markets Authority has said.
It is concerned that the firms' dominance in digital advertising could be harming competition.
People using these platforms also may not be in control of their data, the CMA said.
The comments come amid reports that the government will create a new digital watchdog to oversee these businesses.
The Financial Times reported that the regulator will have new powers which will include enforcing a new code of conduct for big tech firms and allowing more data accessibility for consumers.
Google takes the lion's share of search advertising sales in the UK, accounting for about 90% of the market with revenue of £6bn.
Facebook takes about half of UK online display advertising revenue, reaching £2bn in 2018.
The CMA said in an interim report on the market that "big is not necessarily bad" and that both firms offer innovative products and services.
However, Facebook and Google may have become entrenched in the UK market "with negative consequences for the people and businesses who use these services every day", the competition authority said.
A lack of "real competition" could mean higher advertising costs being passed on to consumers.
It could also mean people are missing out on "the next great new idea from a potential rival", the CMA said.