The CMA is investigating whether Google has broken the law by restricting competition in the digital advertising technology market. Its investigation falls under the Competition Act 1998.
Advertising technology intermediation, also known as the ‘ad tech stack’, is a complex set of services which facilitate the sale of online advertising space between sellers (publishers, like online newspapers and other content providers) and buyers (advertisers). The CMA says that in 2019, UK advertisers spent around £1.8 billion on this kind of online advertising. The market is important because millions of people across the UK use websites that rely on advertising revenue to offer high-quality, free content.
Google has strong positions at various levels of the ad tech stack, charging fees to both publishers and advertisers. The CMA is examining three key parts of this chain, in each of which Google owns the largest service provider:
Demand-side platforms (DSPs) allow advertisers and media agencies to buy publishers’ advertising inventory (i.e. the space they have for advertising) from many sources. Ad exchanges provide the technology to automate the sale of publishers’ inventory. They allow real-time auctions by connecting to multiple DSPs, collecting bids from them. Publisher ad servers 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 ad tech 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 CMA is also concerned that Google may have used its publisher ad server and its DSPs to unlawfully favour its own ad exchange services, while taking steps to exclude the services offered by rivals.
This case follows on from the CMA’s market study into online platforms and digital advertising which identified significant issues and assessed possible solutions to address market power in ad tech. The CMA will consider these further as part of this latest investigation. The CMA has also 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 CMA 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.
If the CMA decides that there has been a breach of competition law then it can impose a fine up to 10% of Google’s worldwide turnover, as well as issue legally binding directions to bring the breach to an end.
The European Commission has launched its own investigation into Google’s practices in the ad tech sector. Google practices are also the subject of a complaint by the State of Texas (and other US States) currently in the US courts. In July 2021, the French Autorité de la Concurrence closed a similar case against Google having imposed a fine and secured commitments.
