The Competition Bureau is suing Google over alleged anticompetitive conduct in the tech giant's online advertising business and wants the company to sell off two of its services and pay a penalty.
The watchdog said Thursday that such action is necessary because an investigation it conducted into Google has found the company "unlawfully" tied together its ad tech tools to maintain its market dominance.
That dominance has discouraged competition from rivals, inhibited innovation, inflated advertising costs and reduced publisher revenues, the bureau said.
The Thursday announcement ratchets up its investigation into Google and the world of online advertising, which largely amounts to ads shown to people when they visit websites.
Website owners offer the ad space as a way to drive revenue, and the ads are typically bought and sold through automated auctions using sophisticated platforms.
Throughout the buy and sell process companies use a slew of tools that help manage ad inventory, facilitate purchases or act as an intermediary between buyers and sellers.
These tools are collectively known as the ad tech stack, which the bureau alleges Google has "near-total control of" because it owns four of the largest online advertising technology services used in Canada: DoubleClick for Publishers, AdX, Display & Video 360 and Google Ads.
"No other single ad tech provider has Google鈥檚 scale or reach across the ad tech stack, with over 200 billion Canadian web ad transactions flowing through Google鈥檚 ad tech tools in 2022," the bureau said.
It estimates Google has a market share of 90 per cent in publisher ad servers, 70 per cent in advertiser networks, 60 per cent in demand-side platforms and 50 per cent in ad exchanges.
However, Dan Taylor, Google's vice-president of global ads, maintains it is a "highly competitive sector."
He said in a statement that the bureau's complaint "ignores the intense competition where ad buyers and sellers have plenty of choice."
Taylor added Google looked forward to defending itself against the bureau.
The matter is headed for the Competition Tribunal, a quasi-judicial body that hears cases brought forward by the competition commissioner about non-compliance with the Competition Act.
The bureau is asking the tribunal to order Google to sell its publisher ad server, DoubleClick for Publishers, and its ad exchange, AdX.
It has also demanded the company pay a monetary penalty equal to three times the value of the benefit it derived from anticompetitive practices or "if that amount cannot be reasonably determined," three per cent of Google鈥檚 worldwide gross revenues.
The bureau said making these moves will help address how "Google positioned itself at the centre of the ad tech ecosystem and used its control across the ad tech stack to unlawfully leverage its market power with one product to strengthen its position with its others."
The watchdog said several moves have convinced it Google's dominance is "by design."
The first is that the bureau alleges Google made its advertiser ad network only available to its own ad exchange, and in turn, compelled publishers to use its publisher ad server to access real-time bids from its ad exchange.
The bureau says the second is that Google worked to "distort auction dynamics" by giving its own ad exchange preferential access to ad inventory, taking negative margins in certain circumstances to disadvantage rivals, and dictating the terms on which its own publisher-customers could transact with rival ad tech tools.
The bureau's allegations were developed during a multi-year investigation that dates back to at least 2021, when it successfully sought a court order requiring it to provide documents related to its online advertising business. It achieved a second, similar order earlier this year.
Under the Competition Tribunal鈥檚 guidelines, respondents to applications like the one the bureau filed against Google typically have 45 days to file a response. The bureau then has 14 days to reply.
News Media Canada, an organization representing the journalism industry, was pleased with the Competition Bureau's push.
"We cannot afford to have one company use its extraordinary market power to dictate and coerce digital advertising terms, and control pricing, while self-preferencing to the detriment of publishers and advertisers alike," president and chief executive Paul Deegan said in a statement.
"It is long past time to end this anti-competitive conduct."
This report by The Canadian Press was first published Nov. 28, 2024.
Tara Deschamps, The Canadian Press
