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Google ad dominance threatened by third investigation

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Google faces its third investigation by the Competition and Markets Authority in 16 months over allegations it abuses its dominance to distort Britain’s advertising markets.

The regulator said it was examining how Google’s advertising technology may deliberately and “illegally” favour its own services above those of third parties.

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

CMA investigators will examine three key areas of the online advertising industry where it says Google is the largest market player. All of those areas concern how online advertising space is bought and sold, and which adverts are displayed to people browsing the web.

British businesses spent £1.8bn on internet advertising in 2019, the CMA said. Google’s UK profits for 2021 were £276m.

Last June the CMA opened an investigation into Google and Apple’s dominance of the smartphone software industry and in March the authority began looking into whether Google and Facebook owner Meta had secretly agreed to stitch up the online advertising market by putting unfair barriers in the way of rivals.

A Google spokesman said the company’s services “supported an estimated £55 billion in economic activity for over 700,000 businesses in the UK”, adding: “We will continue to work with the CMA to answer their questions and share details on how our systems work.”

Advertising revenues have dramatically shifted away from their traditional home with news publishers towards Google and Facebook over the last two decades.

The CMA highlighted that shift today, warning that if Google had unfairly distorted the online advertising market it may have caused a decline in the quality of local news and raised businesses’ advertising costs by unfairly driving up prices for online adverts.

It is understood the CMA investigation will not be looking into YouTube, Google's video sharing site, amid concerns the sheer size of YouTube would dilute the inquiry's scope. YouTube earned about $29bn (£22bn) for Google last year, with about 30,000 hours of video clips being uploaded by its users every sixty minutes on average.

The current CMA investigation is similar to a June 2021 inquiry launched by the European Commission, which is examining claims that Google distorts market competition by making it harder for rivals to compete in the so-called ad tech stack.

CMA officials said the investigation is at an early data-gathering stage. By February next year the authority must decide whether or not it will drop the inquiry, as it did with the US company's Privacy Sandbox proposals in February.

Privacy Sandbox is Google's plan to replace online tracking cookies with new technology that doesn't rely on placing files on consumers' digital devices. Critics say it is an attempt to pull up the drawbridge on ad rivals who depend on the decades-old cookie technology.

Privacy campaigners have long pushed for official probes into the opaque world of online advertising technology. Earlier this month the Irish Council for Civil Liberties described part of that market, the real-time bidding industry, as “the biggest data breach ever recorded”.

Ireland is one of the key EU countries that holds the regulatory whip over Google as the US company has established its European headquarters there.

The ICCL was one of the key campaigning forces behind an EU investigation into Google's market dominance opened in March 2022.

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