Google Abusing Dominant Position in Ad Tech Sector, Says UK Government

The UK’s Competition and Markets Authority has provisionally ruled that Google’s dominance in the ad tech market is detrimental to competitors — and could fine the tech giant up to 10% of its global annual turnover as a result.

Since at least 2015, the company has allegedly been operating its tools for ad space buyers and sellers, such as Google Ads, in a way that protects its ad space auction platform, AdX, from competition. The CMA also says Google is preventing rival ad space listing tools from competing with its own, DoubleClick For Publishers.

Such anticompetitive practices “could be harming thousands of UK publishers and advertisers.” According to the authority, advertisers spend about £1.8 billion annually on open-display ads, marketing goods, and services via apps and websites to UK consumers.

“We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites,” said Juliette Enser, interim executive director of Enforcement, in a press release. “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.

She added: “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.”

SEE: UK Regulator Deems Microsoft and Inflection AI’s Partnership a Merger, But Clears It Of Competition Concerns

Google Responds to Accusations

The digital advertising technology sector, known as the “ad tech stack,” includes various intermediaries facilitating the sale of online ads. Google owns four of these: Google Ads, DV360, AdX, and DoubleClick For Publishers.

Google Ads and DV360 are both used by advertisers to bid for advert spaces on websites and apps. DoubleClick For Publishers is a platform for managers of websites and apps where they can list their available ad space. AdX connects the two by matching the highest bidding advertiser with the website or app manager in a real-time auction.

The CMA says that Google has blocked competition with AdX and DoubleClick For Publishers through several practices, including:

• 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 ad exchange platforms’ auctions.
• Allowing AdX to bid first in auctions run by DoubleClick For Publishers for online advertising space, meaning rivals potentially do not get a chance to submit bids.

Dan Taylor, Google’s vice president of Global Ads, responded to the accusations via a statement to TechCrunch, saying the case was based on “flawed interpretations of the ad tech sector.”

“Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers,” Taylor added.

The CMA has only released a Statement of Objections and has not ruled that Google is in breach of the Chapter II provision of the Competition Act 1998, which prohibits the abuse of a dominant position that may affect trade within the country. It will consider representations from Google and suggest what actions the search giant can take to cease its ongoing anti-competitive practices.

Multiple investigations into Google’s practices

The CMA’s investigation has been combined with one into Google’s abuse of its dominant position in header bidding services, which was opened in March 2022. Header bidding is a service that allows websites to offer their ad space to multiple buyers at the same time.

Google is also seeking to appeal a UK court decision from June, which allowed a lawsuit from Ad Tech Collective Action LLP to proceed to trial. The collective of online publishers alleges that Google has abused its dominant position in the digital advertising technology sector, leading to losses worth £13.6 billion.

But it’s not just the UK that has taken issue with Google’s ad tech practices. The US Department of Justice and state attorneys general initiated an antitrust investigation in 2020, alleging Google “has illegally used the distribution agreements to thwart competition.” That investigation remains ongoing.

In August, a federal judge ruled that the tech company holds a monopoly on general search services and text ads and has broken antitrust law.

The European Commission also told Google that a “mandatory divestment” of part of its ad tech business would be the only way to address its own competition concerns, after disclosing its preliminary view that the company had breached EU antitrust rules in March.

An EU investigation into the way Google’s compliance with the new Digital Markets Act is ongoing. Regulators say that it is promoting its own services above third parties’ in search results and therefore is “gatekeeping.”

In March, Google temporarily removed some Search widgets, such as Google Flights, to allow more access to individual businesses in response to the DMA coming into force.