Google is having more problems with antitrust. On Friday, the U.K.’s competition watchdog said it thinks the company broke trade rules in the adtech industry. Now, the tech giant has a chance to respond to the preliminary results before the regulator makes a final choice.
If you are found to have broken U.K. competition law, you could be given corrective orders and fines of up to 10% of your annual global group sales. People are going to pay close attention to how this case turns out.
Since May 2022, the Competition and Markets Authority (CMA) in the U.K. has been looking into Google’s role in the adtech stack for possible abuses of control. New information is that a formal statement of objections was sent to Google, along with preliminary results that say the ad tech giant is favoring its own ad exchange over competitors and customers.
The CMA said it thinks Google’s actions could hurt “thousands” of publishers and marketers in the UK who use its adtech to buy and sell ad space.
Adtech is a field that most people don’t fully understand, but it’s deeply connected to the main web. Tracking technologies, such as cookies, are used to make profiles of online users as they browse the web. Different types of adtech platforms share information about them so that ad space can be bought and sold quickly and in real time. The goal is to match ads with people who will see them. Google is the leader in this very profitable business of automated ads. But the CMA thinks it has stacked the deck in its favor.
The CMA said in a news release that it was worried that Google was using its power in this area to favor its own services. “Google puts competitors at a disadvantage and stops them from competing on a level playing field so that they can give publishers and advertisers a better, more competitive service that helps their businesses grow.”
The CMA says that Google is the leader in adtech and plays a key role in “three key parts” of the chain. These are providing ad buying tools for marketers (Google Ads and DV360), an ad exchange (AdX), and a publisher ad server (DoubleClick For Publishers, or DFP).
AdX is where Google charges the most in the adtech stack, according to the CMA, at about 20% of the bid amount. The company is worried that Google has given AdX an unfair edge by using self-preferencing in different parts of the chain.
As of now, the CMA has decided that Google has abused its strong positions by running both its buying tools and publisher ad server in a way that boosted AdX’s market position and kept other exchanges from competing with it, the report said. “Because Google’s ad tech business is so tightly integrated, the CMA has provisionally found that Google’s actions have also made it harder for rival publisher ad servers to compete with DFP, which hurts competition in this market.”
In terms of the exact things Google is doing that the CMA doesn’t like, it said they are many and have changed over time, but some examples are:
- letting AdX work with marketers that use Google Ads’ platform before other advertisers;
- Changing advertiser bids so that they are worth more when sent to AdX’s auction than when sent to sales run by competitors; and
- AdX would be able to bid first in DFP auctions for online ad space, which would give it a “right of first refusal” and could prevent competitors from bidding at all.
The government agency has also tentatively found that Google’s bad behavior is still going on. It said, “The CMA is therefore thinking about what may be needed to make sure that Google stops the anti-competitive practices and doesn’t do the same things again.”
We asked the CMA if structural remedies are being thought about, like making Google sell off some adtech units. We will update this report with any answer we get.
It has been looking into Google’s adtech since 2021 as part of its own antitrust investigation. Last year, the EU warned that if it found that the company had broken competition rules in the EU, the only way to fix the problem would be to break up Google’s adtech business.
Juliette Enser, acting executive director of enforcement at the CMA, said in a statement, “We’ve provisionally found that Google is using its market power to hurt competition when it comes to the ads people see on websites.”
This is because many companies can keep their digital content free or cheap by making money from online ads. Millions of people in the UK see ads on these websites and apps, which helps people buy and sell goods and services. Because of this, it is very important for publishers and marketers, who make this free content possible, to have fair competition and get a good deal when they buy or sell digital ad space.
Google sent a message supposedly from its VP of Global Ads, Dan Taylor, when asked for comment. In it, Taylor denied the CMA’s findings.
Taylor wrote, “Our advertising technology tools help websites and apps pay for their content and help businesses of all sizes find new customers.” “Google is still dedicated to making our publisher and advertiser partners more valuable in this very competitive field.” At its heart, this case is based on wrong ideas about the ad tech industry. The CMA’s view is not shared by us, and we will react accordingly.
The company’s adtech business is also being looked into in its own country. In January of last year, the U.S. Department of Justice sued it, saying that Google was running an illegal, anticompetitive, and exclusive adtech monopoly.
The tech giant lost another antitrust case in the U.S. this summer. In August, a judge in the U.S. District Court said it had broken the law to keep its online search monopoly. That’s what Google said it would do.
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