Google may have broken UK competition law by manipulating the digital advertising market to its advantage, the Competition and Markets Authority (CMA) has provisionally found.
The CMA said it believes Google has been using its advertising technology to restrict competition in the market, “harming thousands of UK publishers and advertisers”.
The CMA highlighted that a majority of publishers and advertisers in the UK buy and sell advertising using Google’s ad tech.
Juliette Esner, interim executive director of 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.
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“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.”
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The UK advertising market grew in 2023 to be worth £36.6bn, with most of this going to tech platforms. Google made an estimated £14bn on search alone as search advertising grew to £14.7bn.
Google’s vice president of global ads, Dan Taylor, said in response to the CMA’s statement: “Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers.
“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 CMA’s view and we will respond accordingly.”
The ad stack and Google’s role
The digital advertising sector, otherwise known as the ‘ad stack’, is a complex process of buying and selling ads between advertisers and publishers.
The CMA said Google plays an important intermediary role in this process, with two buying tools for advertisers, a publishing ad server for publishers, and an ad exchange tool.
The watchdog provisionally found that, since 2015, Google has abused its dominant market position, built on high market shares, to prevent competitors from providing an alternative to its services.
The regulator detailed the practices that Google has used to achieve this dominance, which include:
- Preferential access: providing its own ad exchange tool with exclusive or preferential access to advertisers using Google’s ad platform.
- Manipulating advertiser bids: advertisers who bid on Google’s ad exchange tool will have a higher value than when submitted to rival exchange auctions.
- Auctioning: in auctions run on Google’s ad server for publishers, Google’s ad exchange tool can bid first, effectively preventing competitors from making bids.
What next for Google?
The CMA is considering how to prevent Google from pursuing these “anti-competitive” practices. The regulator has issued its findings to Google and is awaiting a response, after which it will give a final decision.
The CMA has suspended other investigations into Google while it awaits the launch of the Digital Markets Unit, which will provide specific oversight on major big tech companies.
Owen Meredith, chief executive of the News Media Association which represents national and regional publishers in the UK, said the Digital Markets Unit must be able to “start its work investigating the large tech platforms as quickly as possible, with Google Search and Google ad tech as top priorities for designation.
“Robust conduct requirements will be critical to the success of the regime, and the Digital Markets Unit should be able to use pro-competitive interventions where needed.”
The CMA’s findings come at a time of increased global pressure to regulate Big Tech. Google recently lost a competition trial in the US in which it was found to have used monopoly practices in the search market. Google faces another competition trial for its advertising practices set to begin on 9 September.
In the UK a claim alleging Google caused huge losses to publishers by abusing its dominant position in the ad tech market, seeking £13.6bn in damages on behalf of the industry, has been permitted to go to trial.
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