Google says UK competition watchdog is wrong about its market dominance

Google plays down its advertising dominance as it waits to hear if The Department of Justice wants to break it up

Google has hit back at a report published by British regulators which outlined the technology company’s alleged stranglehold on advertising. 

Don Harrison, mergers and acquisitions chief at Google, told a US Senate hearing on Tuesday - the latest in a series of antitrust hearings the company has been subjected to - that a recent report from the Competition and Markets Authority (CMA) was flawed because it incorrectly defined the market Google operates in.

The report claimed that Google has enjoyed a 90pc share in the £6bn digital advertising market in the UK for more than a decade, and that it dominated the four segments where it offers products for both buying and selling advertising. 

Mr Harrison, who has presided over Google’s purchases since 2013 and overseen land grabs like British artificial intelligence startup DeepMind, Motorola Mobility and AdMob, a mobile advertising company, surprised Congress by disputing the statistics. 

“I think they [CMA] use too narrow a market definition and they don’t take into account that if we tried to raise [advertisement] prices that they [customers and publishers] would flip to other options,” he said after the figures were presented to him by Republican Senator Josh Hawley.

Mr Harrison suggested that the report’s authors failed to grasp the “richness of the entire ecosystem” and sought to downplay its role as one of the biggest technology companies in the world, claiming that it faced stiff advertising competition from Amazon and Facebook. 

Donald Harrison, president for global partnerships and corporate development with Google, appeared over video at a Senate Judiciary Subcommittee hearing in Washington on Tuesday

But Senators were quick to condemn Google during an aggressive grilling lasting more than three hours, with Senator Hawley accusing the company of operating a “monopoly upon monopoly”, providing glimmer of insight into what might be to come as the US Department of Justice (DoJ) wraps its own antitrust investigation in a matter of weeks

Former Democratic presidential candidate Senator Amy Klobuchar and Democrat Senator Richard Blumenthal floated the prospect of Google's advertising sales system being regulated like the stock market in order to eliminate conflicts of interest that may arise as it buys and sells advertising space across the internet. Senator Blumenthal claimed that Google would have been prosecuted for insider trading if it were subject to the same rules as the banks. 

He said: "Given that Google operates the exchange and competes with publishers on that exchange, that is a classic risk of insider trading if you compare it to the stock market. Google would have been prosecuted long ago for insider trading."

Google is waiting to hear whether it will be charged following a Department of Justice investigation into whether it has unfairly squeezed out competition. Several states have joined forces to conduct their own local investigations into whether it has stifled competition more locally. 

The CMA has claimed that there is a strong argument to introduce tighter regulations to rein Google and Facebook in, including offering up its data to rivals however it has handled the mantle back to the government, which it says should legislate appropriately. 

In its report published in July, the CMA said that while Google should not be curbed purely for its success, it has become so large and has such extensive access to data that it would be impossible for rivals to compete on an equal footing, something it denies. 

This could lead to reduced innovation in technology and result in consumers handing Google more data than they feel comfortable with because there are no other options available. It can also result in higher prices and undermine the ability of newspapers to produce content that supports a democracy.

It has grown particularly concerned about Google’s strong position in advertising auctioning, with more than 90pc of the advertising server, which manages the publisher’s inventory and decides which advert is served based on the highest bidder.

Publishers say it is difficult to switch to a different ad server and can take months and cost significant amounts of revenue.  The CMA stated that Google also had a share of between 40 and 60pc in supply-side platforms and of between 50 and 70pc in demand-side platforms, which form each layer of the digital advertising ecosystem.