Google has said it will co-operate with the UK’s Competition and Markets Authority (CMA) after it confirmed a second investigation of the tech giant.
On Thursday the CMA announced an investigation into Google’s advertising technology intermediation, also known as the ‘ad tech stack’, which is a complex set of services which facilitate the sale of online advertising space between sellers (publishers, content providers etc) and buyers (advertisers).
That investigation is looking into the so called ‘Jedi Blue’ agreement between the two tech giants in 2018, and whether that agreement for online display advertising services may have breached competition rules.
Now this week the CMA has begun a second investigation solely on Google’s advertising practices.
The UK competition regulator pointed out that UK advertisers spent around £1.8 billion on online advertising in 2019, and that millions of people in the UK use websites that rely on advertising revenue to offer free content.
Google has strong positions at various levels of the ad tech stack, charging fees to both publishers and advertisers, said the CMA.
Therefore the CMA said it is examining 3 key parts of this chain, in each of which Google owns the largest service provider:
Demand-side platforms (DSPs) allow advertisers and media agencies to buy publishers’ advertising inventory (i.e. the space they have for advertising) from many sources.
Ad exchanges provide the technology to automate the sale of publishers’ inventory. They allow real-time auctions by connecting to multiple DSPs, collecting bids from them.
Publisher ad servers manage the publisher’s inventory and decide which ad to show, based on the bids received from different exchanges and/or direct deals between publishers and advertisers.
The CMA said it is assessing whether Google’s practices in these parts of the ad tech stack may distort competition. These include whether Google limited the interoperability of its ad exchange with third-party publisher ad servers and/or contractually tied these services together, making it more difficult for rival ad servers to compete.
In addition, the CMA is also concerned that Google may have used its publisher ad server and its DSPs to illegally favour its own ad exchange services, while taking steps to exclude the services offered by rivals.
Ensuring free content
“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,” noted Andrea Coscelli, the CMA’s chief executive.
Dr Andrea Coscelli, CMA chief executive.
“This would be bad for the millions of people who enjoy access to a wealth of free information online every day,” said Coscelli. “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,” said Coscelli. “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.”
A Google spokesperson told Reuters the company would continue to work with the CMA to answer its questions and share the details on how the company’s systems work.