Google has been found of abusing its market dominance over digital advertising in the United Kingdom (UK), the country’s competition watchdog said in a statement on Friday.
The UK’s Competition and Markets Authority (CMA) has found that the search engine giant took advantage of its market dominance and impeded competition from rivals in the digital advertising space. The watchdog said “Google may have broken competition law by using its dominance to favour its own ad tech services in open-display advertising”.
Google has time and again been accused of abusing its dominance in global browsing and advertising, with the latest cases having emerged in the UK, the United States (US), Turkey, and Japan. Shelling out billions of dollars to monopolise internet search, forcing manufacturers to designate Google as the default search engine on devices, and suppressing rival apps are some of the allegations that are routinely levelled against Google.
The CMA’s provisional findings suggest possible violations by Google through the operations of its publishers ad server and purchasing tools to hinder competition in the UK. The watchdog’s findings focus on how the search engine mammoth “self-preferences” its own ad exchange, which restricts competition and causes harm to other publishers and advertisers in the industry.
Similar probes are also under way in the US and the European Union (EU).
“Google is using anti-competitive practices in open-display ad tech, which it believes could be harming thousands of UK publishers and advertisers,” the competition regulator said in its statement of objections to Google’s advertising practices. The CMA added that while “placing digital ads on websites, the vast majority of publishers and advertisers use Google’s ad tech services in order to bid for and sell advertising space”.
The regulator has raised concerns that Google’s preferences of its own services through anticompetitive means prevents a level playing field, hurts competitors, and hampers growth in the digital advertising industry.
“We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites,” Juliette Enser, interim executive director of enforcement, said. “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.”
Enser stressed the importance of benefits for publishers (sellers) and advertisers (buyers) that enable free content, and these benefits come from effective competitions and fair deals when buying or selling advertising space online.
The statement explains the open-display advertising in simple terms. The digital advertising space, which is widely referred to as the “ad tech stack”, includes various intermediaries that facilitate the sale of online open-display advertising on websites and mobile applications. When a website is visited or app opened, a series of auctions and transactions happen, which determine which ads will be shown to the user.
“This process involves sending requests for bids and, in response, advertiser bids being sent through a chain of various intermediaries to match the space on the webpage with the advertiser willing to pay the most for it,” according to the statement.
Google, which operates two ad buying tools (namely “Google Ads” and “DV360”), serves as an intermediary in the process. For publishers, Google operate a publisher ad server called “DoubleClick for Publishers”, and a different ad exchange mechanism known as “AdX”, which receives requests for bids and responding bids from publishers and advertisers, respectively. “AdX is where Google charges its highest fees in the ad tech stack (approximately 20% of the bid amount),” the statement claims.
Since 2015, according to CMA, Google has abused its dominant positions through both DFP and AdX in an attempt to “strengthen AdX’s market position and to protect AdX from competition from other exchanges”. 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,” the CMA said.
Google’s anti-competitive practices include preferential and exclusive access to advertisers that use the Google Ad platforms; manipulating bids for a higher value when they are 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, giving it a “right of first refusal” and depriving rivals of submission bids.
“The CMA has provisionally found that this anti-competitive conduct is ongoing,” according to the statement. “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.”
Google has, on the other hand, contested the CMA’s findings. “Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector,” Google said. “The core of this case rests on flawed interpretations of the ad tech sector.”
