(Bloomberg) -- Alphabet Inc.’s Google is abusing its dominant position in advertising technology, the UK’s antitrust agency warned in a move that could pave the way for hefty fines and an order to change one of the tech giant’s most lucrative businesses.
The Competition and Markets Authority said Friday in its statement of objections that Google is using its dominance in tech advertising to prioritize its own services and is potentially harming thousands of UK publishers and advertisers.
Google has long held a key position in which it’s able to collect data on users, allowing advertisers to target ads to them. It also sells ad space and provides the technology that allows for advertisers to find publishers to sell their space.
Using its own algorithms, Google automatically calculates and offers ad space and prices to advertisers and publishers as a user clicks on a web page. Online advertising is Alphabet’s most lucrative business, generating about $225 billion, or about 80% of total revenue in 2022.
“It’s so important that publishers and advertisers – who enable this free content – can benefit from effective competition and get a fair deal when buying or selling digital advertising space,” said Juliette Enser, the CMA’s interim executive director of enforcement.
Google hit back at the CMA’s findings saying that they were based on “flawed interpretations of the ad tech sector.” Dan Taylor, VP of Global Ads at Google, said it disagrees with the findings and will respond accordingly.
EU regulators have also criticized Google’s dominance in tech advertising. Last year it laid antitrust charges against the company for favoring its own ad exchange program over rivals’ and bolstering Google’s central role in the ad tech supply chain.
Crucially, the European Commission said in the July 2023 order that a potential order for Google to implement behavioral remedies may not be sufficient to correct the abusive conduct, possibly opening the way for an order against Google to break up its ad tech business from its core services.
Separately, the US Department of Justice will face Google in a September trial, calling for the break up of the search giant’s ad tech business over alleged illegal monopolization. The DoJ claims that Google’s dominance over advertising technology allows it to keep at least $0.30 out of every dollar advertisers spend through its online advertising tools.
If any wrongdoing is found by the CMA, it has the powers to impose a fine of 10% of a firm’s global revenue. The CMA says it will take any feedback from Google into consideration before any final decision is made and that decision will be made by a separate panel from the team who did the preliminary investigation.
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