Google faces more antitrust problems. The U.K.’s competition watchdog said Friday it suspected the company of antitrust violations in the ad tech space. The tech giant will now have a chance to respond to its preliminary findings before the regulator makes a final decision.
Confirmed breaches of UK competition law could result in corrective orders and fines of up to 10% of the group’s total annual global turnover, so the outcome of this case is likely to be closely watched.
The UK Competition and Markets Authority (CMA) has been investigating Google’s role in the ad tech toolkit over suspected abuse of dominance since May 2022. The new development is sending a formal statement of objections to Google outlining interim findings that accuse the tech ad giant of favouring its own ad exchange at the expense of customers and competitors.
The Competition and Markets Authority said it believed Google’s practices could harm “thousands” of UK publishers and advertisers who rely on its advertising technology to bid for and sell advertising space.
Ad tech is a field that consumers don’t understand much, but it is inextricably linked to the mainstream web. As web users browse the internet, they are identified using tracking technologies such as cookies. Data about them is traded between different types of ad tech platforms to power a high-speed, real-time trading of ad space in an attempt to match ads to viewers’ eyes. Google is a major player in this lucrative programmatic advertising business. But the Competition and Markets Authority suspects it has turned the tables in its favour.
“It is concerned that Google is actively using its dominance in this sector to favor its own services,” the agency wrote in a note. press release“Google is putting competitors at a disadvantage and preventing them from competing on an equal footing to provide publishers and advertisers with a better, more competitive service that supports the growth of their businesses.”
Google dominates the ad tech sector – playing a powerful middleman role in “three key parts” of the chain, according to the Competition and Markets Authority, including providing advertisers with ad buying tools (Google Ads and DV360); publisher ad server (DoubleClick For Publishers, or DFP); and ad exchange (AdX).
The Competition and Markets Authority noted that AdX is where Google charges its highest fees in the advertising toolkit (“around 20% of the bid amount”). The authority is concerned that Google has been able to give AdX an unfair advantage by applying self-preferencing tactics across different links in the chain.
“The CMA provisionally finds that, since at least 2015, Google has abused its dominant position by operating its own publisher ad server and purchasing tools in order to strengthen AdX’s market position and protect AdX from competition from other exchanges,” she wrote. “Furthermore, given the highly integrated nature of Google’s ad technology business, the CMA provisionally finds that Google’s conduct has also prevented the ad servers of rival publishers from being able to compete effectively with DFP, thereby harming competition in this market.”
As for the specific Google practices it objects to, the CMA said they were different and had evolved over time – but examples it cites include:
- Providing exclusive or preferential access to AdX to advertisers using the Google Ads platform;
- Manipulating advertisers’ bids so that they are worth more when submitted to an AdX auction than when submitted to competing exchange auctions; and
- Allowing AdX to bid first in DFP-run auctions for online advertising space, effectively giving it a “right of first refusal” — with competitors potentially getting no chance to bid.
The regulator also provisionally found that Google’s abusive behaviour was continuing. “The CMA is therefore considering what might be required to ensure that Google stops its anti-competitive practices and that Google does not engage in similar practices in the future,” it added.
We have asked the Competition and Markets Authority whether structural solutions form part of these considerations – such as requiring Google to sell certain ad tech units – and will update this report with any response.
The European Union — which has its own antitrust investigation into Google’s ad tech (ongoing since 2021) — warned last year that if it concluded the company had broken EU competition laws, the only viable solution would be to break up its ad tech business.
“We have provisionally found that Google is using its market power to hinder competition when it comes to the advertising people see on websites,” Juliet Enser, interim executive director of enforcement at the Competition and Markets Authority, said in a statement.
“Many businesses are able to keep their digital content free or at a lower cost by using online advertising to generate revenue. Ads on these sites and apps reach millions of people across the UK – helping to buy and sell goods and services. That’s why it’s so important that publishers and advertisers – who enable this free content – are able to benefit from effective competition and get a fair deal when buying or selling digital advertising space.”
When contacted for comment, a Google representative sent a statement attributed to Dan Taylor, vice president of global advertising, which rejected the CMA’s findings.
“Our ad tech tools help websites and apps monetize their content and enable businesses of all sizes to reach new customers effectively,” Taylor wrote. “Google remains committed to creating value for our publisher and advertiser partners in this highly competitive industry. The crux of this case is based on misinterpretations of the ad tech industry. We disagree with the CMAs’ view and will respond accordingly.”
The company’s ad tech empire is also under investigation at home. The US Department of Justice filed a lawsuit against it in January of last year, accusing Google of operating an illegal, anticompetitive and exclusionary monopoly in ad tech.
The tech giant has already lost a separate antitrust case in the United States this summer. In August, a U.S. district court ruled that the company had acted illegally to maintain a monopoly on online search. Google said it would appeal the ruling.