Britain’s competition watchdog has launched an investigation into whether Google has broken the law by restricting competition in the advertising technology market.
The Competition and Markets Authority will assess whether the firm had distorted competition and made it more difficult for rival advertising services to compete.
The regulator said its investigation into the Alphabet-owned search giant would focus on advertising technology intermediation, also known as the ‘ad tech stack’.
This is a set of services which facilitate the sale of online advertising space between sellers and buyers, and is said to be worth £1.8billion a year based on 2019 data.
The CMA said Google has a strong position at various levels of this space – providing a wide range of services including platforms where advertisers can buy online advertising space; technology that automates the sale of advertising space; and those for managing ad inventories for publishers, which decide which ads to show.
The range of services offered by California-based Google means it deals with and charges fees to both ad sellers and buyers.
The CMA said it wanted to assess whether Google was distorting competition in the sector by limiting the interoperability of some services and contractually tying some of its services together – making it more difficult for others to compete.
The competition regulator said it also had concerns that Google may have used its platform to illegally favour its own ad services while taking steps to exclude those offered by others.
‘We’re worried that Google may be using its position in ad tech to favour its own services to the detriment of its rivals, of its customers and ultimately of consumers,’ CMA chief executive Andrea Coscelli said.
‘This would be bad for the millions of people who enjoy access to a wealth of free information online every day.
‘Weakening competition in this area could reduce the ad revenues of publishers, who may be forced to compromise the quality of their content to cut costs or put their content behind paywalls.
‘It may also be raising costs for advertisers which are passed on through higher prices for advertised goods and services.
‘It’s vital that we continue to scrutinise the behaviour of the tech firms which loom large over our lives and ensure the best outcomes for people and businesses throughout the UK.’
In response, a Google spokesman said: ‘Advertising tools from Google and many competitors help websites and apps fund their content, and help businesses of all sizes effectively reach their customers.
‘Google’s tools alone have supported an estimated £55billion in economic activity for over 700,000 businesses in the UK and when publishers choose to use our advertising services, they keep the majority of revenue.
‘We will continue to work with the CMA to answer their questions and share the details on how our systems work.’
There are also thousands of other players in the same market, including the likes of Amazon, Abode, Oracle, Microsoft, Facebook, Criteo, Trade Desk – many of whom have their own ad tech platforms.
The probe by the CMA, which is based in London’s Canary Wharf, follows its investigation into Google and Facebook owner Meta’s ‘Jedi Blue’ agreement earlier this year.
Governments around the world are strengthening the regulation of US tech giants that have become even more powerful during the pandemic. There are multiple investigations globally into their market positions, including in the US and the EU.
Britain imposed a new competition regime last year to prevent Google and Facebook using their dominance to push out smaller firms and disadvantage customers.
The move created a dedicated Digital Markets Unit within the CMA which could be given powers to suspend, block and reverse decisions made by technology firms and to impose financial penalties for non-compliance.
Companies were told they needed to be more transparent about how they used consumer data and that advertising practices needed to adapt to changing expectations around how data was collected and used.