In a sign of fresh trouble for Google (GOOGL), the UK’s antitrust regulator, the Competition and Markets Authority (CMA), announced that it had provisionally determined that the tech giant abused its dominant position in digital advertising. The CMA alleged that Google engaged in anti-competitive practices in open display ad tech by favoring its own ad exchange, AdX. This could potentially harm many British publishers and advertisers.
Moreover, Juliette Enser, the CMA’s interim executive director of enforcement, stated, “We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites.”
Details of the UK CMA’s Investigation
To elaborate, Google is a key central player in the digital ad ecosystem, offering servers to publishers for managing ad space on their websites and apps and tools for advertisers and media agencies to buy display ads. Furthermore, Google’s AdX is an ad exchange where advertisers and publishers can buy and sell ads in real time at auctions.
In addition, according to the CMA, Google’s AdX charges the highest fees in the ad tech sector, around 20% of the amounts for bids. Moreover, the regulator has alleged that Google manipulates bids to favor AdX and allows AdX to bid first in auctions run by its own ad server, potentially excluding competitors.
GOOGL’s Response to the CMA’s Charges
In response to these allegations, Google commented that it disagreed with the CMA’s findings. Dan Taylor, Google’s VP of Global Ads, argued that the company’s advertising tools help fund content and enable businesses to reach new customers.
Furthermore, this investigation follows similar probes by the U.S. Department of Justice and the European Commission about the tech giant’s adtech activities. Earlier this year, EU regulators suggested that Google might need to sell part of its ad tech business to address concerns, a measure Google deemed “disproportionate.”
If the tech giant is found guilty, the CMA could impose a fine of up to 10% of the company’s global turnover.
What Is the Target Price for GOOGL Stock?
Analysts remain bullish about GOOGL stock, with a Strong Buy consensus rating based on 28 Buys and eight Holds. Over the past year, GOOGL has increased by more than 15%, and the average GOOGL price target of $204.15 implies an upside potential of 29.8% from current levels.