The Competition and Markets Authority (CMA) is launching its third investigation into Google within a span of 16 months. This time, the probe focuses on allegations that Google is exploiting its dominant position to manipulate Britain’s advertising markets. The CMA is specifically examining how Google’s advertising technology may be favoring its own services over those of third-party competitors, potentially in a “illegal” manner.
The CMA’s chief executive, Andrea Coscelli, expressed concern over Google’s potential abuse of its ad tech position, stating that it could harm rivals, customers, and ultimately consumers.
The investigation will center on three critical areas of the online advertising industry where Google holds the largest market share. These areas involve the buying and selling of online advertising space, as well as the display of advertisements to internet users whilst they browse.
According to the CMA, British businesses spent £1.8 billion on internet advertising in 2019, while Google’s UK profits for 2021 amounted to £276 million.
Prior to this investigation, the CMA launched a separate inquiry last year into Google and Apple’s dominance in the smartphone software industry. In March, the authority also started investigating whether Google and Meta, the owner of Facebook, colluded to manipulate the online advertising market and hinder rivals.
Google responded to the allegations, emphasizing the economic value it brings to the UK by supporting over 700,000 businesses amounting to an estimated £55 billion. The company pledged to cooperate with the CMA and provide insights into its systems.
Over the past two decades, advertising revenues have significantly shifted from traditional news publishers to digital platforms like Google and Facebook.
The CMA highlighted the impact of this shift, warning that if Google distorted the online advertising market unfairly, it could result in declines in the quality of local news and increased advertising costs for businesses due to artificially inflated online ad prices.
It’s important to note that the CMA’s investigation will not include YouTube, Google’s video sharing platform, mainly due to concerns about the inquiry’s scope being diluted by YouTube’s vast size. In 2021, YouTube generated approximately $29 billion in revenue for Google, with users uploading approximately 30,000 hours of video content every sixty minutes on average.
This CMA investigation mirrors a previous inquiry launched by the European Commission in June 2021, which examines allegations of Google distorting market competition through its ad tech stack, making it difficult for rivals to compete.
The CMA officials stated that the investigation is currently in the early stages of data-gathering. By February next year, the authority will decide whether to continue the inquiry or drop it, similar to their action with regards to Google’s Privacy Sandbox proposals earlier this year.
The Privacy Sandbox is Google’s proposed replacement for online tracking cookies, aiming to use new technology that doesn’t rely on storing files on consumers’ devices. Critics argue that this move is an attempt to disadvantage ad competitors who rely on traditional cookie technology.
Privacy advocates have long been pushing for official investigations into the opaque world of online advertising technology. Recently, the Irish Council for Civil Liberties referred to part of the market, known as real-time bidding, as “the biggest data breach ever recorded.” Notably, Ireland has regulatory authority over Google as the company has established its European headquarters there.
The Irish Council for Civil Liberties played a significant role in advocating for an EU investigation into Google’s market dominance, which was launched in March 2022.
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