UK watchdog blasts Google for 'anti-competitive' behaviour via digital ads

The watchdog levelled its accusations after an investigation, and the findings could potentially lead to a fine worth billions of dollars or an order to change its behaviour.

A British regulator has accused global tech and search giant Google for misusing its dominance in the digital advertising segment to beat competition in the UK, Associated Press reported on September 5.

This development has added more pressure on the US-based company, facing heat on both sides of the Atlantic over its 'ad-tech' business practices, the report said.

Britain's Competition and Markets Authority said the tech giant gives preference to its own services to the detriment of online publishers and advertisers in UK's 1.8 billion pound ($2.4 billion) digital ad market.

The watchdog levelled its accusations after an investigation, and the findings could potentially lead to a fine worth billions of dollars or an order to change its behaviour.

Google is a major player throughout the digital ad ecosystem, providing servers for publishers to manage ad space on their websites and apps, tools for advertisers and media agencies to buy display ads, and an exchange where both sides come together to buy and sell ads in real time at auctions.

“We've provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites,” the watchdog's interim executive director of enforcement, Juliette Enser, said in a press release.

The watchdog's charges, known as a statement of objections, arrive two years after it opened its investigation. Google's digital ad business is also the focus of a European Union antitrust investigation and a US Justice Department lawsuit that's set to go to trial this month.

The CMA said that Google's “anti-competitive" conduct is ongoing, but the company disputed the allegations on Friday.

“Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector,” the company said in a prepared statement. "The core of this case rests on flawed interpretations of the ad tech sector. We disagree with the CMA's view and we will respond accordingly.” The UK watchdog alleged Google has been exploiting its dominance since 2015 to strengthen the market position of its own AdX ad exchange and protect it from rivals. AdX is where Google charges the highest fees in the ad tech system, taking about 20 per cent of the amount from bids, the CMA said.

The regulator's accusations include charges that Google manipulates advertiser bids so they have higher value when they go into AdX auctions then rival exchanges. AdX also gets to bid first in auctions run by Google's publisher ad server, potentially shutting out rivals from the chance to bid, the watchdog said.

Google now has the chance to reply to the charges. The CMA said it's considering what is needed to make sure Google ceases the anti-competitive practices. It has the power to impose a fine worth up to 10 per cent of a company's annual worldwide revenue or issue a legally binding order to stop violations of competition law.

Meanwhile, a federal judge on Friday gave the US Justice Department until the end of the year to outline how Google should be punished for illegally monopolizing the internet search market and then prepare to present its case for imposing the penalties next spring.

The loose-ended timeline sketched out by US District Judge Amit Mehta came during the first court hearing since he branded Google as a ruthless monopolist in a landmark ruling issued last month.

Mehta's decision triggered the need for another phase of the legal process to determine how Google should be penalized for years of misconduct and forced to make other changes to prevent potential future abuses by the dominant search engine that's the foundation of its internet empire.

Attorneys for the Justice Department and Google were unable to reach a consensus on how the time frame for the penalty phase should unfold in the weeks leading up to Friday's hearing in Washington DC, prompting Mehta to steer them down the road that he hopes will result in a decision on the punishment before Labor Day next year.

With agency inputs