Canada Sues Google For Anti-competitive Conduct In Online Advertising

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(RTTNews) - Competition Bureau Canada has filed a legal action against Alphabet Inc.'s Google with the Competition Tribunal for its anti-competitive conduct in online advertising technology services in Canada. The Bureau found during their thorough investigation that Google used its dominant position through conduct intended to ensure that it would maintain and establish its market power.

The regulator says Google's actions have prevented rivals from competing on merits, inhibited innovation, inflated advertising costs and reduced publishers' revenues. This has had serious consequences for Canadian publishers, advertisers, rivals, and consumers, resulting in a substantial prevention and lessening of competition.

Publishers generally count on digital ad revenue to support their activities and reach. Online web advertising consists of ads shown to users when they visit websites. Digital ad inventory is often purchased and sold through automated auctions using sophisticated individual platforms, which are known as ad tech tools.

Google owns four of the largest online advertising technology services used in Canada - DoubleClick for Publishers (DFP), AdX, Display & Video 360 and Google Ads. These are collectively known as the ad tech stack. Google uses the entire stack throughout the buy and sell process in an auction.

Google holds an estimated market share of 90% in publisher ad servers, 70% in advertiser networks, 60% in demand-side platforms and 50% in ad exchanges.

The investigators found that Google, the largest provider across the ad tech stack for web advertising, abused its dominant position and its conduct locked market participants into using its own ad tech tools, excluding competitors.

This prevented rivals from being able to compete on the merits of their offering, and otherwise distorted the competitive process. There are over 200 billion Canadian web ad transactions flowing through Google's ad tech tools in 2022.

The Bureau found that Google unlawfully tied its various ad tech tools together to maintain its market dominance. It also used its dominant position across these ad tech tools to distort auction dynamics by giving its own tools preferential access to ad inventory. It also dictated the terms on which its own publisher customers could transact with rival ad tech tools.

The Bureau is seeking an order from the Tribunal that will require Google to sell two of its ad tech tools, its publisher ad server DFP and its ad exchange AdX.

It also sought to require Google to pay an administrative monetary penalty equal to three times the value of the benefit derived from these practices or 3 percent of Google's worldwide gross revenues. Further, it seeks to prohibit Google from continuing to engage in anticompetitive conduct and practices.

In early March, the Federal Court of Canada allowed the Competition Bureau to expand its ongoing investigations into the online advertising practices of Google in Canada. The Bureau has been investigating Google since October 2021.

The Bureau also investigated Google in 2016 for alleged anti-competitive conduct relating to online search, search advertising and displaying advertising.