Google faces additional antitrust challenges. The competition watchdog in the U.K. announced on Friday that it has suspicions regarding the company’s potential antitrust violations in the adtech sector. The regulator now gives the technology giant the chance to respond to the provisional findings before making a final decision.
Confirmed violations of U.K. competition law could lead to corrective orders and penalties as high as 10% of the annual global group turnover. We expect the outcome of this case to garner significant attention.
CMA investigation in Google AdTech
Since May 2022, the Competition and Markets Authority (CMA) in the U.K. has been conducting an investigation into Google’s involvement in the adtech stack, focussing on potential abuses of dominance. The Competition and Markets Authority (CMA) has issued a formal statement of objections to Google, outlining provisional findings that allege the adtech giant is engaging in self-preferencing of its own ad exchange, to the detriment of both customers and competitors.
The CMA expressed concerns that Google’s practices may be detrimental to “thousands” of UK publishers and advertisers who depend on its adtech for bidding and selling advertising space.
Consumers largely remain oblivious to the adtech landscape, despite its deep interconnection with the broader web ecosystem. As individuals navigate the web, tracking technologies such as cookies are employed to create user profiles. Various adtech platforms exchange user information to facilitate rapid, real-time transactions of advertising space, with the aim of aligning advertisements with audience attention. Google plays a pivotal role in the thriving programmatic advertising sector. However, the CMA expresses concerns that Google may have gained an advantage.
The CMA expressed its concerns regarding Google’s active use of its dominance in the sector to favour its own services, as stated in a press release. “Google undermines its competitors, hindering their ability to compete fairly and ultimately offering publishers and advertisers a service that is more advantageous and conducive to business growth.”
Google holds a commanding position in the adtech ecosystem, serving as a crucial intermediary in three essential components of the chain, according to the CMA. This includes providing ad-buying solutions for advertisers through Google Ads and DV360, a publisher ad server known as DoubleClick For Publishers (DFP), and an ad exchange referred to as AdX.
The CMA highlighted that AdX represents the point at which Google imposes its highest fees within the adtech stack, amounting to roughly 20% of the bid amount. There are concerns that Google may have given AdX an unfair advantage by using self-preferencing tactics throughout various links in the chain.
According to the CMA’s preliminary findings, Google has been abusing its dominant market positions since at least 2015 by using its publisher ad server and buying tools to support AdX’s position in the market and protect it from competition from other exchanges. “Furthermore, the CMA has provisionally decided that the complex interconnected structure of Google’s advertising technology operations has made it harder for competing publisher ad servers to effectively compete with DFP, which has had a negative effect on competition in this market.”
The CMA has identified a range of specific practices that it finds objectionable, noting that these practices have evolved over time. Among the examples cited are:
- AdX is providing exclusive or preferential access to advertisers who use the Google Ads platform.
- AdX is adjusting advertiser bids to ensure they hold greater value in its auction compared to rival exchanges’ auctions.
- By permitting AdX to place its bids first in auctions conducted by DFP for online advertising space, it essentially grants AdX a ‘right of first refusal,’ thereby limiting the opportunity for competitors to submit their bids.
The regulator has provisionally determined that Google’s abusive conduct is still ongoing. The CMA is evaluating the necessary measures to ensure that Google halts its anti-competitive practices and refrains from similar actions in the future, it stated.
We have asked the CMA about including structural remedies in these considerations, such as the potential requirement for Google to divest specific advertising units. We will update this report once we receive a response.
The European Union, which has been conducting an antitrust investigation of Google’s adtech since 2021, issued a warning last year. It stated that if the investigation concludes that the company has violated the bloc’s competition laws, the only feasible remedy would be to dismantle its adtech operations. 
In a statement, Juliette Enser, interim executive director of enforcement at the CMA, remarked: “We’ve provisionally determined that Google is leveraging its market power to obstruct competition regarding the advertisements displayed on websites.”
Numerous businesses manage to maintain their digital content at little to no cost by leveraging online advertising as a revenue stream. Advertisements on these platforms connect with millions of individuals throughout the UK, facilitating the exchange of goods and services. It is crucial for publishers and advertisers, who facilitate access to this free content, to experience effective competition and secure a fair agreement when engaging in the buying or selling of digital advertising space.
A Google representative provided a statement from Dan Taylor, the VP of Global Ads, who dismissed the CMA’s findings.
“Our advertising technology tools empower websites and apps to monetise their content, while also allowing businesses of all sizes to successfully connect with new customers,” Taylor stated. Google is dedicated to delivering value to our publisher and advertiser partners within this intensely competitive industry. This case fundamentally hinges on misinterpretations within the ad tech sector. We have a different perspective from the CMA’s and will provide a response in due course.
The company’s advertising technology empire is currently facing scrutiny domestically. In January of the previous year, the U.S. Department of Justice initiated legal action against Google, alleging that the company was engaging in unlawful, anticompetitive, and exclusionary practices within the adtech sector.
The technology behemoth has already faced setbacks in a separate U.S. antitrust case earlier this summer. In August, a U.S. District Court judge determined that the actions taken were illegal in sustaining a monopoly in the realm of online search. Google has announced its intention to appeal.
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