CMA opens second probe of Google's adtech dominance

The UK’s Competition & Markets Authority is launching a second investigation into whether Google has broken the law by restricting competition in the digital advertising technology market, following its probe into Google and Meta’s ‘Jedi Blue’ agreement.

In 2019, UK advertisers spent around £1.8bn on online advertising through adtech platforms, and Google has strong positions at various levels of the ad tech stack, charging fees to both publishers and advertisers.

The CMA is now examining three key parts of this chain, in each of which Google owns the largest service provider:

– Demand-side platforms, which allow advertisers and media agencies to buy publishers’ advertising inventory from many sources.

– Ad exchanges, which provide the technology to automate the sale of publishers’ inventory and allow real-time auctions by connecting to multiple DSPs, collecting bids from them.

– And finally, publisher ad servers, which manage the publisher’s inventory and decide which ad to show, based on the bids received from different exchanges and/or direct deals between publishers and advertisers.

The CMA is assessing whether Google’s practices in these parts of the adtech stack may distort competition. These include whether Google limited the interoperability of its ad exchange with third-party publisher ad servers and/or contractually tied these services together, making it more difficult for rival ad servers to compete.

The organisation is also concerned that Google may have used its publisher ad server and its DSPs to illegally favour its own ad exchange services, while taking steps to exclude the services offered by rivals.

CMA chief executive Andrea Coscelli said: “We’re worried that Google may be using its position in adtech to favour its own services to the detriment of its rivals, of its customers and ultimately of consumers.

“This would be bad for the millions of people who enjoy access to a wealth of free information online every day.

“Weakening competition in this area could reduce the ad revenues of publishers, who may be forced to compromise the quality of their content to cut costs or put their content behind paywalls. It may also be raising costs for advertisers which are passed on through higher prices for advertised goods and services.

“It’s vital that we continue to scrutinise the behaviour of the tech firms which loom large over our lives and ensure the best outcomes for people and businesses throughout the UK.”

This case follows on from the CMA’s market study into online platforms and digital advertising which identified significant issues and made an assessment of possible solutions to address market power in ad tech. The regulator will consider these further in the course of its investigation.

The CMA has subsequently opened a competition investigation into Google and Meta’s ‘Jedi Blue’ agreement in relation to header bidding services, which are a part of the wider ad tech stack.

The watchdog is also monitoring compliance with commitments Google made in relation to its Privacy Sandbox proposals to remove third-party cookies and other functionality from Google’s Chrome browser.