Invezz.com - The UK’s Competition and Markets Authority (CMA) has issued a statement of objections against Google (NASDAQ:GOOGL), accusing the tech giant of anti-competitive behaviour in the online display advertising sector.
The CMA’s provisional findings suggest that Google may have used its dominance in ad tech services to restrict competition in the UK market.
This comes as global regulatory scrutiny of major tech firms intensifies, with increasing calls for accountability and fairness.
Google’s ad tech dominance under scrutiny
The CMA’s objections raise concerns about Google’s control in the digital advertising space, where it provides critical services for both publishers and advertisers.
A 2019 study indicated that UK publishers and advertisers were spending around £1.8 billion annually on ad tech services, with the majority relying on Google’s technology.
The regulator claims Google has “harmed competition” by favouring its own ad tech services over those of competitors, a practice known as “self-preferencing.”
Impact on UK publishers and advertisers
The CMA argues that Google’s practices have negatively affected thousands of UK publishers and advertisers who depend on online display advertising for revenue.
The alleged “self-preferencing” allows Google to exploit its dominant position to disadvantage competing ad tech providers, preventing them from competing on a “level playing field.”
This, the CMA contends, undermines competition and innovation in digital advertising.
Google’s ad tech ecosystem explained
Google’s advertising ecosystem includes several components, such as “Google Ads,” “DV360,” and “DoubleClick For Publishers,” all integrated with Google’s advertising exchange, AdX, which is central to the ad tech stack.
The CMA’s provisional findings suggest Google has used its control over these tools to strengthen its market position and charge higher fees on AdX, taking approximately 20% from each bid processed.
Source: UK’s Competition and Market Authority
Regulatory action in Europe and the US
The CMA’s concerns align with actions taken by regulators elsewhere. In the European Union, Google was charged last year with breaching antitrust rules, and there are discussions about breaking up parts of the company.
Similarly, in the US, a federal judge recently sided with the Department of Justice in an antitrust case against Google, a landmark decision akin to the Microsoft (NASDAQ:MSFT) antitrust case of the late 1990s.
Self-preferencing in Google’s strategy
‘Self-preferencing’ refers to the preferential treatment a company gives to its own products or services.
The CMA suggests that Google’s control over key ad tech tools allows it to favour its own advertising exchange over competitors’.
This practice may not only stifle competition but also inflate prices for advertisers, impacting the broader digital economy and consumer choice.
The regulator’s findings highlight a systemic issue within Google’s ad tech operations with potentially wide-reaching consequences.
What’s next for Google and the ad tech industry?
Facing these allegations, Google encounters significant regulatory pressure that could lead to substantial changes in its UK ad tech operations and possibly beyond.
The CMA’s statement of objections is just the beginning of a lengthy investigative process, with Google likely to have the opportunity to respond to the claims.
If found guilty, potential outcomes could range from fines to more severe measures, such as structural changes to Google’s ad tech business to ensure fair competition.
This article first appeared on Invezz.com
