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Google’s New Privacy Tools Technology Prompts CMA Complaint  

26th November 2020

Markets that are tipped can seldom recover even in the face of a determined regulator like the Competition & Markets Authority, UK’s principal competition regulator. That was also the lesson the EU Commission learnt with the Microsoft case over Windows Media player many years ago.

However, a coalition of leading technology and publishing companies styled Markets for an Open Web (MOW) has sounded the alarm now about the effect of Google’s introduction of its new privacy tools “Privacy Sandbox”. The Group is worried that the introduction of these new tools, ostensibly on the grounds of protecting users’ privacy, will help consolidate Google’s dominance and lead to irreversible changes in the digital advertising market. They allege these tools will effectively disintermediate media companies, advertisers, and technology businesses from their consumers as Google will effectively own the means by which those companies reach their consumers.

MOW filed a complaint on 23rd November with the CMA asking it to block the launch of Google’s Privacy Sandbox technology which is scheduled for full implementation in early 2021. It is believed the complaint alleges that Google is abusing its dominant position contrary to Article 102 TFEU/ Chapter II Competition Act 1998 and is requesting the regulator to take interim measures to block the roll out.

MOW states that Google is modifying its Chrome browser and Chromium developer tools to give it greater control over how publishers, advertisers and other digital businesses can operate on the web. It is alleged that the Privacy Sandbox technology will move the whole digital advertising industry (including login, advertising, and other features) “off the open web and into the closed environment of Google’s Chrome browser, where it would be beyond the reach of regulators.” MOW claims the consequence of this move would be to deny news publishers access to the cookies they use to sell advertising, which will significantly cut their revenues.

In its complaint MOW cites the findings of the CMA’s online platforms and digital advertising market study (“Market Study”). The CMA recognised in that report the powerful position of digital platforms and recommended the formation of a Platforms Regulator to regulate platform giants like Google and Facebook more effectively to complement the use of competition law powers. Other international regulators like the US Department of Justice and the European Commission have all recognised that Google has market dominance over key elements of “the web value chain” and are devising their own strategies to provide long term competitive remedies to address these concerns.

The aim of the MOW complaint is to delay the introduction of Privacy Sandbox until more effective regulation of platforms is introduced. The Group comments that the efforts of regulators will be in vain if “Google manages to consolidate its dominance through the introduction of Privacy Sandbox prior to the regulators’ recommended changes to the law being implemented.” It added that “If Google releases this technology, they will effectively own the means by which media companies, advertisers and technology businesses reach their consumers and that change will be irreversible.”

The complaint comes at a time of increased scrutiny into the lawfulness of existing programmatic advertising and real time bidding, as complaints mount against the controversial decision of the UK Information Commissioner’s Office to drop its investigation into the processing of personal data in the Adtech sector.

The CMA is yet to formally respond but it is considering the complaint to see whether the launch of a formal competition investigation is merited. It has however already highlighted what it believes are the shortcomings of competition law in their application to the Platform giants in the conclusions of its Market Study.

It is perhaps optimistic for MOW to expect that interim measures can and will be granted to stave off introduction of Privacy Sandbox pending more substantive changes to platform regulation whether domestically or internationally.  A more likely outcome is that the CMA will deal with this case under its competition powers and that Google may be persuaded to delay implementation of its new privacy tools until the outcome of the CMA’s inquiry is known. Given the CMA (and formerly the OFT’s) difficult relationship with the use of interim measures the CMA is likely to try to avoid their use against Google in this case and is more than likely to seek a more consensual resolution of this matter.

Authors: Robert Bell and Chris Pulham