News
A statement of objections sets out how Google may have broken competition law by using its dominance to favour its own ad tech services in open-display advertising.
Juliette Enser: “We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites.”
Photograph: Firmbee.com on Unsplash.
An investigation by the Competition and Markets Authority (CMA) has
provisionally found that Google is using anti-competitive practices in
open-display ad tech, which it believes could be harming thousands of UK
publishers and advertisers.
As set out in a statement of objections issued to Google on Friday 6
September, the CMA has provisionally found that, when placing digital ads
on websites, the vast majority of publishers and advertisers use Google’s ad
tech services in order to bid for and sell advertising space.
The CMA is concerned that Google is actively using its dominance in this
sector to preference its own services. Google disadvantages competitors and
prevents them competing on a level playing field to provide publishers and
advertisers with a better, more competitive service that supports growth in
their business.
In its 2019 market study into digital advertising, the CMA found that
advertisers were spending around £1.8 billion annually on open-display ads,
marketing goods and services via apps and websites to UK consumers.
Juliette Enser, interim executive director of enforcement, said: “We’ve
provisionally found that Google is using its market power to hinder
competition when it comes to the ads people see on websites.
“Many businesses are able to keep their digital content free or cheaper by
using online advertising to generate revenue. Adverts on these websites and
apps reach millions of people across the UK – assisting the buying and
selling of goods and services.
“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.”
The US Department of Justice and European Commission have also opened
separate investigations into Google’s activities in ad tech. These
proceedings are currently ongoing.
About the open display ‘ad tech stack’ and the CMA’s concerns
The digital advertising technology sector, commonly referred to as the ‘ad
tech stack’, consists of various intermediaries that facilitate the sale of
online open-display advertising space on websites or mobile apps between
‘sellers’ (i.e. publishers) and ‘buyers’ (i.e. advertisers).
When a user opens a website or app, while the content loads on the page, a
near-instantaneous series of auctions and transactions takes place to
determine which ads will be shown to that user on that webpage or app. This
process involves sending requests for bids and, in response, advertiser bids
being sent through a chain of various intermediaries to match the space on
the webpage with the advertiser willing to pay the most for it.
The CMA’s investigation has focused on Google’s role as an intermediary in
three key parts of this chain, where it has a powerful market position with
high market shares. For advertisers, Google operates two ad buying tools,
known as “Google Ads” and “DV360”. For publishers, it operates a publisher
ad server, known as “DoubleClick For Publishers” (DFP). In the centre of the
ad tech stack, Google operates an ad exchange, known as “AdX”. Ad exchanges
typically receive requests for bids from publishers and responding bids from
advertisers, and then conduct an auction to match these two sides. AdX is
where Google charges its highest fees in the ad tech stack (approximately
20% of the bid amount).
The CMA’s provisional findings relate to anti-competitive
‘self-preferencing’ by Google. The CMA has provisionally found that, since
at least 2015, Google has abused its dominant positions through the
operation of both its buying tools and publisher ad server in order to
strengthen AdX’s market position and to protect AdX from competition from
other exchanges. Moreover, due to the highly integrated nature of Google’s
ad tech business, the CMA has provisionally found that Google’s conduct has
also prevented rival publisher ad servers from being able to compete
effectively with DFP, harming competition in this market.
Google has done this through various practices that give AdX competitive
advantages, disadvantage Google’s rivals, and are against the interests of
Google’s advertiser and publisher customers. These practices have evolved
over time and include:
- providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform;
- manipulating advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions; and
- allowing AdX to bid first in auctions run by DFP for online advertising space, effectively giving it an ‘right of first refusal’ – with rivals potentially not having any chance to submit bids.
The CMA has provisionally found that this anti-competitive conduct is
ongoing. The CMA is therefore considering what may be required to ensure
that Google ceases the anti-competitive practices, and that Google does not
engage in similar practices in the future.
The CMA says it will now carefully consider representations from Google before
reaching its final decision. For more information, visit the CMA’s
investigation into suspected anti-competitive conduct by Google in ad tech
case page.
Commenting on the investigation, News Media Association Chief Executive Owen
Meredith said on 6th September: “The Competition and Market Authority’s provisional findings
today state explicitly that Google’s self-preferencing of its own ad
exchange causes harm to advertisers and publishers, and in turn consumers.
“In order to tackle these damaging impacts on our creative sectors, we need
the new digital markets regulator to start its work investigating the large
tech platforms as quickly as possible, with Google Search and Google ad tech
as top priorities for designation.
“Robust conduct requirements will be critical to the success of the regime,
and the Digital Markets Unit should be able to use pro-competitive
interventions where needed.
“By levelling the playing field, we can create a digital economy for the UK
which fosters genuine competition, powering growth in these critical
markets.”
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