The report also calls for changes to merger rules to ensure the Competition and Markets Authority (CMA) can clamp down on takeovers that could damage future competition and innovation.
"I welcome the publication of Professor Furman and his expert panel's report on unlocking digital competition". The Panel's terms of reference asked it to consider the potential opportunities and challenges the emerging digital economy may pose for competition and pro-competition policy, and to make recommendations on any changes that may be needed.
Matthew Fell, chief United Kingdom policy director of the CBI, said new rules must "keep pace" with the tech industry.
The digital sector has created substantial benefits but these have come at the cost of increasing dominance of a few companies which is limiting competition and consumer choice and innovation.More news: NKorean official: Kim rethinking US talks, launch moratorium
The recommendation was included in a six-month review of the UK's tech sector, commissioned by Hammond and led by Harvard professor and former chief economic advisor to President Obama, Jason Furman.
The independent panel leading the review said the proposals would level the playing field and allow more companies to join the market, leading to the creation of new social media sites and online search platforms. "I think the United Kingdom can do better". It followed a report that cited issues within the digital market.
"We welcome the measures put forward to tackle anti-competitive practices and bullying tactics by market leaders". For example, an aggregator service could bring together a person's content and data from several social media platforms and make it easier to browse and message friends and family who use different apps.
Furman told the BBC that consumers are now not easily able to switch social networks or change search engine because there is very limited choice.More news: You can now use Steam Link nearly anywhere
United Kingdom chancellor Philip Hammond has requested that the Competition and Markets Authority (CMA) launch a review after an independent report he commissioned detailed how the UK's competition framework isn't fit for the economic challenges posed by digital markets, at home and internationally.
Britain's financial secretary, Philip Hammond, said the government would respond later this year to the report's recommendations, any of which must be approved by Britain's Parliament to take effect.
The independent panel was made up of Professors Jason Furman, Diane Coyle, Amelia Fletcher, Derek McAuley and Philip Marsden. The need for the review becomes clear when one considers that the duopoly of Google and Facebook will account for 61.4% of global online adspend in 2019, a recent WARC Global Ad Trends report found.More news: Paul Scholes resigns as Oldham manager after one month in charge