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CMA opens fresh probe into Google's ad practices

By Josh White

Date: Thursday 26 May 2022

CMA opens fresh probe into Google's ad practices

(Sharecast News) - The Competition and Markets Authority is investigating whether Alphabet division Google has broken the law by restricting competition in the digital advertising technology market, it announced on Thursday.
It would be the regulator's second investigation into Google's practices in ad tech, following the launch of a probe into Google and Facebook parent Meta's 'Jedi Blue' agreement.

Advertising technology intermediation, also known as the 'ad tech stack', is a set of services facilitating the sale of online advertising space between sellers and buyers.

The CMA said that in 2019, UK advertisers spent about £1.8bn on such online advertising, with Google holding "strong positions" at various levels of the ad tech stack, charging fees to both publishers and advertisers.

It said it was examining three key parts of the chain, in each of which Google owns the largest service provider.

The first is demand-side platforms, which allow advertisers and media agencies to buy publishers' advertising inventory from many sources.

It said the second part was ad exchanges, which provide the technology to automate the sale of publishers' inventory, and allow real-time auctions by connecting to multiple demand-side platforms, collecting bids from them.

The third and final part of the chain was publisher ad servers, which manage the publisher's inventory and decide which ad to show, based on the bids received from different exchanges or direct deals between publishers and advertisers.

It said it would assess whether Google's practices in the three parts of the ad tech stack could distort competition, including whether Google limited the interoperability of its ad exchange with third-party publisher ad servers, or contractually tied the services together, making it more difficult for rival ad servers to compete.

The CMA said it was also concerned that Google might have used its publisher ad server and its demand-side platforms to illegally favour its own ad exchange services, while taking steps to exclude the services offered by rivals.

"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," said CMA chief executive Andrea Coscelli.

"This would be bad for the millions of people who enjoy access to a wealth of free information online every day.

"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."

Coscelli said it could 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."

The case followed the CMA's market study into online platforms and digital advertising, which identified "significant issues" and made an assessment of possible solutions to address market power in ad tech.

A draft bill to give the regulator more powers to govern the behaviour of big technology firms through the Digital Markets Unit was recently announced in the Queen's Speech.

Until that legislation is in place, the CMA said it would "forge ahead" using its existing powers in the tech sector, including probes into Apple's App Store, Meta's use of data, and Apple and Google's mobile ecosystems over competition concerns.

The European Commission also recently launched its own investigation into Google's practices in the ad tech sector.

Google's practices are also the subject of a complaint by the State of Texas, among other US States, currently before US courts.

In July last year, the French Autorité de la Concurrence closed a similar case against Google, imposing a fine and securing commitments from the internet giant.

Reporting by Josh White at Sharecast.com.

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