The Italian Competition Authority investigate Google over advertising market abuse

Following a complaint filed by an Italian digital advertising lobby group, on 20 October the Italian Competition Authority (the Authority) have opened an investigation into Google for alleged abuse, of its dominant position in the display advertising market (prohibited under article  Article 102 of the Treaty on the Functioning of the European Union) .

Display advertising is the space that website managers and owners make available to advertisers for the placement and display of advertising banners. Compared to traditional forms of advertising, display advertising is based on high exploitation of the data (and therefore preferences) of users who visit a particular site. Such exploitation allows providing advertisements that are as close as possible to the recipients’ consumption orientations. The thesis is that Google has put in place conducts aimed at a discriminatory use of the data collected through its applications. In this way, Google would have, on one hand, further strengthened its market power and, on the other, prevented competing operators from being able to compete effectively. In particular, the conducts contested by Google are:

  1. i) the interruption of the provision to third party advertisers of the decryption keys of the Google user ID (that is the identifier that allows advertisers to associate the user’s activity on Google platforms with tracking data deriving from external platforms );
  2. ii) the interruption of the sale by third-party intermediaries of advertising space on YouTube;

iii) the exclusion from its YouTube platform of user tracking systems (such as cookies or tracking pixels) of third party advertisers.

In evaluating the aforementioned conducts, the Authority also considers the numerous services that Google offers to its customers (Gmail, Google Docs, YouTube, Google Drive, Google Maps), which, as associated with the same user ID, constitute additional channels that allow the collection of a significant amount of user data. Given the enormous amount of data held and used by Google in its user targeting activities, the refusal to provide competitors with access to Google IDs and the exclusion of third-party pixels from its YouTube platform could lead to an unjustified competitive advantage.

The conducts under the scrutiny of the Authority seem to have a significant impact on competition in the various markets of the digital advertising chain with extensive repercussions on competitors and consumers. The absence of competition in the intermediation of digital advertising, in fact, could reduce the resources allocated to website producers and publishers, thus impoverishing the quality of content directed to end customers. Furthermore, the absence of effective competition based on merit could discourage technological innovation for the development of less invasive technologies and advertising techniques for consumers.

The conclusion of the investigation phase is expected by 30 November 2021.

Luca Condoleo