A UK watchdog has provisionally found that Google may be engaging in anti-competitive practices to maintain its dominance in the online advertising technology market. The Competition and Markets Authority (CMA) warns that Google’s potentially unlawful behavior could be harming thousands of UK publishers and advertisers.
The CMA accuses Google of undermining competition by preventing rivals from competing effectively with its own technology, which handles billions of pounds spent by UK businesses on online advertising. Google has responded, labeling the watchdog’s findings as “flawed” and indicating it will provide a formal response.
The CMA’s investigation revealed that most businesses rely on Google’s services for placing digital ads on websites. Google argues that it has a strong incentive to support UK firms and contends that advertisers choose its products because they are effective and help businesses grow.
The CMA will now review Google’s representations before deciding on further action. If Google is found to have violated competition law, the watchdog could impose a financial penalty of up to 10% of the company’s annual global turnover and issue legally binding directives.
Juliette Enser, the CMA’s interim executive director of enforcement, stated, “We’ve provisionally found that Google is using its market power to hinder competition in the online advertising sector.” She emphasized that many businesses rely on revenue from digital ads to keep their content free, which reaches millions of people across the UK.
“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,” she wrote.
But Google’s vice president of global ads, Dan Taylor argued the search giant’s advertising technology helped websites and apps fund their content, and effectively reach new customers.
“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,” he wrote.
Google’s activities in ad tech are also subject to continuing probes by the US Department of Justice and the European Commission.
Competition economist Dr Cristina Caffarra, told the BBC that while the CMA’s statement of objections certainly presented “another headache” for Google, the regulator was merely “joining the club” of those who have already taken action.
“The UK is by no means some sort of pathfinder here,” she said.
The Department of Justice, state of Texas – which along with nine other states sued Google over alleged abuse of its ad tech dominance in 2020 – and the EU are all far ahead, Dr Caffarra added.
In 2023, EU competition regulators suggested that Google might need to divest part of its ad-tech business to resolve their concerns. However, Google has argued that such a measure would be “disproportionate.”
Additionally, Google is challenging a UK court’s decision from June that permitted a £13.6 billion collective-action lawsuit against the company to move forward. This lawsuit alleges that Google’s anti-competitive practices led to financial losses for online publishers in the UK. Google has pledged to “vigorously” oppose the claim, asserting that it will fight the case based on factual evidence.
