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Google may have rigged its ad business, UK competition watchdog claims

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Europe Google Publishers (Copyright 2021 The Associated Press. All rights reserved)
Europe Google Publishers (Copyright 2021 The Associated Press. All rights reserved)

The UK’s Competition and Markets Authority (CMA) has launched an investigation into Google’s advertising business claiming that the search giant is restricting competition in the digital advertising market.

The investigation focuses on the ‘ad tech stack’, which facilitates the sale of online advertising space between sellers and buyers.

Specifically, the CMA is looking into demand-side platforms which allow allow advertisers and media agencies to buy publishers’ advertising inventory; ad exchanges that provide the technology to automate the sale of publishers’ inventory; and the ad servers which store the ads and decides which ones to show.

It is possible that Google made it difficult for rival ad servers to compete with it by limiting the interoperability of its own ad exchange with other servers, and that it devoured its own ad exchange service.

“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. This would be bad for the millions of people who enjoy access to a wealth of free information online every day”, Andrea Coscelli, the CMA’s chief executive, said in a statement.

Weakening competition in this area could reduce the ad revenues of publishers, who may be forced to compromise the quality of their content to cut costs or put their content behind paywalls. It may also be raising costs for advertisers which are passed on through higher prices for advertised goods and services.

It’s vital that we continue to scrutinise the behaviour of the tech firms which loom large over our lives and ensure the best outcomes for people and businesses throughout the UK.

“Advertising tools from Google and many competitors help websites and apps fund their content, and help businesses of all sizes effectively reach their customers. Google’s tools alone have supported an estimated £55 billion in economic activity for over 700,000 businesses in the UK and when publishers choose to use our advertising services, they keep the majority of revenue. We will continue to work with the CMA to answer their questions and share the details on how our systems work”, a Google spokesperson said in a statement.

This is the second investigation that the CMA has conducted into Google. The other, which it launched in March 2022 in collaboration with the European Comission, is looking into the claim that the two tech giants’ online display advertising services may have breached EU competition rules.

”Many publishers rely on online display advertising to fund online content for consumers. Via the so-called “Jedi Blue” agreement between Google and Meta, a competing technology to Google’s Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps. If confirmed by our investigation, this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers”, executive vice-president Margrethe Vestager, in charge of competition policy, said at the time.

"The allegations made about this agreement are false. This is a publicly documented, procompetitive agreement that enables Facebook Audience Network (FAN) to participate in our Open Bidding program, along with dozens of other companies," Google said in a statement to Reuters.

"Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements," Meta said.

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