BRUSSELS—British and European regulators threatened to crack down on Google and Facebook parent Meta over an agreement for online display advertising services, saying Friday that the deal may breach rules on fair competition.
The fresh scrutiny in Europe, which has pioneering efforts to rein in big technology companies, strikes at the heart of Google’s business—the digital ads that generate nearly all of its revenue.
In the “ad tech” marketplace bringing together Google and a constellation of online advertisers and publishers, the company controls access to the advertisers that put ads on its dominant search platform. Google also runs the auction process for advertisers to get ads onto a publisher’s site.
The European Union’s top competition watchdog opened an antitrust investigation into a 2018 pact for Meta’s Audience Network to participate in Google’s Open Bidding program.
The European Commission, the EU’s executive arm, said the deal, which Google internally dubbed “Jedi Blue,” may be part of efforts to exclude ad tech services that compete with Google’s Open Bidding program to the detriment of publishers and consumers.
Britain’s Competition and Markets Authority announced a parallel investigation into the agreement, which is also the focus of a state-led antitrust lawsuit against Google that’s before U.S. courts.
Google said the “allegations made about the agreement are false,” calling it “a publicly documented, procompetitive agreement” enabling Facebook to participate in its Open Bidding program, along with dozens of other companies.
Meta said the “non-exclusive bidding agreement with Google, and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements.” Meta said it would cooperate with both the EU and UK inquiries.
EU Competition Commissioner Margrethe Vestager said that if the investigation confirms the watchdog’s suspicions, “this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers.”
The European Commission said it intends to “closely cooperate” with the UK competition authority on the investigation.
The watchdogs are looking into both the ad bidding agreement and whether Google abused its dominant position in the online ad market.
“If one company has a stranglehold over a certain area, it can make it hard for startups and smaller businesses to break into the market—and may ultimately reduce customer choice,” the UK watchdog’s chief executive, Andrea Coscelli, said in a statement.
By Raf Casert and Kelvin Chan