UK watchdog accuses Google of anti-competitive behavior in digital ads business

LONDON — Google was slammed Friday by U.K. regulators who say it’s taking advantage of its dominance in digital advertising to thwart competition in Britain, ratcheting up pressure that the tech giant is facing on both sides of the Atlantic over its “ad tech” business practices.

Britain’s Competition and Markets Authority said that the U.S. company gives preference to its own services to the detriment of online publishers and advertisers in Britain’s 1.8 billion pound ($2.4 billion) digital ad market. The watchdog leveled its accusations after an investigation, and the findings could potentially lead to a fine worth billions of dollars or an order to change its behavior.

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 U.S. 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 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 U.K. 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% 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% of a company’s annual worldwide revenue or issue a legally binding order to stop violations of competition law.