More antitrust woes for Google. The U.K’.s competition watchdog said on Friday that it suspects the company of adtech antitrust abuses. The tech giant will now have a chance to respond to the provisional findings before the regulator reaches a final decision.
Confirmed violations of U.K. competition law can lead to corrective orders and fines of up to 10% of annual worldwide group turnover. So the outcome of this case is likely to be closely watched.
The U.K.’s Competition and Markets Authority (CMA) has been investigating Google’s role in the adtech stack over suspected abuses of dominance since May 2022. The new development is the sending of a formal statement of objections to Google setting out provisional findings that accuse the adtech giant of self-preferencing its own ad exchange at the expense of customers and rivals.
The CMA said it believes Google’s practices could be harming “thousands” of U.K. publishers and advertisers who rely on its adtech to bid for and sell advertising space.
The adtech space is little understood by consumers but it’s inextricably entwined with the mainstream web. As web users browse the internet, they are profiled using tracking technologies like cookies. Data about them is traded between different types of adtech platforms to power high velocity, real-time trading of ad space in a bid to match ads with eyeballs. Google has a kingpin role in this lucrative programmatic ads business. But the CMA suspects it’s skewed the deck in its favor.
“The CMA is concerned that Google is actively using its dominance in this sector to preference its own services,” it wrote in a press release. “Google disadvantages competitors and prevents them competing on a level playing field to provide publishers and advertisers with a better, more competitive service that supports growth in their business.”
Google dominates the adtech stack — playing a powerful intermediary role in “three key parts” of the chain, per the CMA, including offering ad buying tools for advertisers (Google Ads and DV360); a publisher ad server (DoubleClick for Publishers or DFP); and an ad exchange (AdX).
The CMA noted AdX is where Google charges its highest fees in the adtech stack (“approximately 20% of the bid amount”). It’s concerned Google has been able to give AdX an unfair advantage by applying self-preferencing tactics across different links of the chain.
“The CMA has provisionally found that, since at least 2015, Google has abused its dominant positions through the operation of both its buying tools and publisher ad server in order to strengthen AdX’s market position and to protect AdX from competition from other exchanges,” it wrote. “Moreover, due to the highly integrated nature of Google’s ad tech business, the CMA has provisionally found that Google’s conduct has also prevented rival publisher ad servers from being able to compete effectively with DFP, harming competition in this market.”
In terms of the specific Google practices it’s objecting to, the CMA said these are various and have evolved over time — but examples it cites include:
- providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform;
- manipulating advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions; and
- allowing AdX to bid first in auctions run by DFP for online advertising space, effectively giving it an ‘right of first refusal’ – with rivals potentially not having any chance to submit bids.
The regulator has also provisionally found Google’s abusive conduct ongoing. “The CMA is therefore considering what may be required to ensure that Google ceases the anti-competitive practices, and that Google does not engage in similar practices in the future,” it added.
We understand structural remedies — such as requiring Google to sell off certain adtech units — could be part of these considerations.
The European Union, which has its own antitrust probe of Google’s adtech (ongoing since 2021), warned last year that if it concludes the company has broken the bloc’s competition laws, the only viable solution would be to break up its adtech business.
Commenting in a statement, Juliette Enser, interim executive director of enforcement at the CMA, said: “We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites.”
“Many businesses are able to keep their digital content free or cheaper by using online advertising to generate revenue. Adverts on these websites and apps reach millions of people across the UK — assisting the buying and selling of goods and services. That’s why it’s so important that publishers and advertisers — who enable this free content — can benefit from effective competition and get a fair deal when buying or selling digital advertising space.”
Reached for comment, a Google representative sent a statement attributed to Dan Taylor, its VP of Global Ads, who rejected the CMA’s findings.
“Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers,” Taylor wrote. “Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector. The core of this case rests on flawed interpretations of the ad tech sector. We disagree with the CMAs view and we will respond accordingly.”
The company’s adtech empire is also under investigation on home soil. The U.S. Department of Justice filed suit against it in January last year — accusing Google of operating an unlawful, anticompetitive and exclusionary adtech monopoly.
The tech giant already lost a separate U.S. antitrust case this summer. In August a U.S. District Court judge found it had acted illegally to maintain a monopoly in online search. Google has said it will appeal.
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