The net could finally be closing in on Google’s dominance of the adtech market, with the UK Competition & Markets Authority provisionally finding that the tech giant is using anti-competitive practices in open-display adtech, potentially harming thousands of UK publishers and advertisers.
The decision has been set out in a statement of objections issued to Google, with CMA provisionally finding that, when placing digital ads on websites, the vast majority of publishers and advertisers use Google’s adtech services in order to bid for and sell advertising space.
The CMA is concerned that Google is actively using its dominance in this sector to preference its own AdX ad exchange that allows publishers to sell their ad inventory to multiple ad networks and advertisers.
Google disadvantages competitors and prevents them competing on a level playing field to provide publishers and advertisers with a better, more competitive service that supports growth in their business.
In its 2019 market study into digital advertising, the CMA found that advertisers were spending around £1.8bn annually on open-display ads, marketing goods and services via apps and websites to UK consumers. However, this has increased considerably over the past five years.
The CMA’s provisional findings relate to anti-competitive ‘self-preferencing’ by Google. The CMA has provisionally found that, since at least 2015, Google has abused its dominant positions through the operation of both its buying tools and publisher ad server in order 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, harming competition in this market.
Google has done this through various practices that give AdX competitive advantages, disadvantage Google’s rivals, and are against the interests of Google’s advertiser and publisher customers.
These practices have evolved over time and include providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform, it also manipulates advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions.
Finally, Google allows AdX to bid first in auctions run by DoubleClick For Publishers for online advertising space, effectively giving it a “right of first refusal” – with rivals potentially not having any chance to submit bids.
The CMA has provisionally found that this anti-competitive conduct is ongoing. 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.
The regulator says it will now carefully consider representations from Google before reaching its final decision.
CMA interim executive director of enforcement Juliette Enser 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.
“Many businesses are able to keep their digital content free or cheaper by using online advertising to generate revenue. Ads 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.”
In response to the move, IPA director general Paul Bainsfair said: “On behalf of our agency members and their clients, as well as for the benefit of the public – as set out in our Royal Charter, the IPA has always championed a competitive, pluralistic media landscape. As such, we have been carefully observing the CMA’s investigation, as well as parallel investigations.
“Noting they are provisional, the CMA’s findings of ongoing ‘abuse of dominant positions through the operation of both publisher ad server and buying tools to restrict competition in the UK’ are at odds with the best interests of our members and the advertisers they operate on behalf of.
“As the CMA has said, they will now decide what they deem may be required to ensure these anti-competitive practices cease; and what final representations from Google are made before they reach their final decision. We shall continue to monitor this closely.”
Client body ISBA has also waded in. In a statement, it said: “The £2bn programmatic sector of the open web, digital advertising market is characterised by its multiple actors and supply chain complexity, and can be extraordinarily difficult to navigate.
“ISBA has sought to help our members find their way via the publication of our Financial Audit Toolkit, and with our Programmatic Supply Chain Transparency Studies, published alongside PwC in 2020 and 2023. These have enabled our members to achieve greater clarity and control, and improve the effectiveness of their spending.
“As those studies demonstrated and as the CMA has reaffirmed, Google is indisputably the biggest actor in the sector. We hope that the findings of the CMA’s investigation will add to our overall understanding of this system, and enable advertisers to navigate its complexities with even greater confidence.”
Google’s conduct in the adtech market has been under scrutiny in numerous jurisdictions for years. In June 2021, the French competition authority concluded that Google had abused its dominant position in this market. Google did not contest the decision, accepted a fine of €220m and agreed to change its conduct.
The US Department of Justice and European Commission have also opened separate investigations into Google’s activities in adtech. These proceedings are ongoing.
Meanwhile, in June this year the UK’s Competition Appeal Tribunal gave the green light to a group of online publishers to pursue their £13.6bn claim against Google over its alleged abuse of power in the digital advertising market, meaning it can now proceed to trial.
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