UK CMA probes Google for anti-competitive practices in ad tech

The UK’s Competition and Markets Authority (CMA) has provisionally determined that Google is engaging in anti-competitive practices in the open-display advertising technology (ad tech) market, which may be negatively impacting thousands of UK publishers and advertisers.

According to a statement of objections issued to Google, the CMA's preliminary findings suggest that most publishers and advertisers rely on Google’s ad tech services to bid for and sell advertising space when placing digital ads on websites.

The CMA is concerned that Google is leveraging its dominance in the sector to prioritize its own services, thereby disadvantaging competitors and hindering their ability to offer more competitive services. This potentially harms publishers and advertisers, who could benefit from better options that would promote business growth.

In a 2019 market study on digital advertising, the CMA found that UK advertisers were spending around £1.8 billion (€2.1bn) annually on open-display ads, which market goods and services through websites and apps to UK consumers.

“We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites,” stated Juliette Enser, Interim Executive Director of Enforcement. She further emphasized the importance of effective competition, noting that many businesses rely on online advertising to generate revenue, which keeps digital content free or affordable for consumers. “That’s why it’s so important that publishers and advertisers... get a fair deal when buying or selling digital advertising space,” she added.

Investigations into Google’s ad tech activities have also been launched by the US Department of Justice and the European Commission, with these proceedings still ongoing.

The ad tech stack and the CMA’s concerns

The digital ad tech sector, often referred to as the ‘ad tech stack’, involves intermediaries that facilitate the sale of open-display advertising space between publishers (sellers) and advertisers (buyers) on websites or mobile apps. When a user accesses a site or app, a rapid auction process occurs to determine which ads will be displayed. Advertisers submit bids through intermediaries, and these bids are matched with available ad space.

The CMA’s investigation focused on Google’s role as an intermediary in three key parts of the chain, where it holds a strong market position. Google operates two ad-buying tools for advertisers, ‘Google Ads’ and ‘DV360’, a publisher ad server called ‘DoubleClick For Publishers’ (DFP), and an ad exchange known as ‘AdX’, where it charges its highest fees (around 20% of the bid amount).

The CMA’s provisional findings concern Google’s anti-competitive ‘self-preferencing’ practices. Since at least 2015, Google is accused of abusing its dominance by using both its buying tools and publisher ad server to strengthen AdX’s market position and protect it from competition. The CMA also found that Google’s conduct has prevented rival publisher ad servers from competing effectively with DFP, which damages competition.

Google’s anti-competitive practices, which have evolved over time, include:

- Granting AdX exclusive or preferential access to advertisers using Google Ads;
- Manipulating advertiser bids to be higher when submitted to AdX compared to rival exchanges;
- Allowing AdX to bid first in auctions run by DFP, effectively granting it a ‘right of first refusal,’ leaving rivals without an opportunity to bid.

The CMA has found that this behavior is ongoing and is considering measures to ensure Google stops these practices and prevents similar conduct in the future. The CMA will review Google’s representations before reaching a final decision.