New Google probe shows Canada’s competition cop is getting serious

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The Competition Bureau’s recently expanded investigation into search and advertising giant Google is a sign that Canada’s competition cop is taking its new powers seriously.

Beginning in 2020, the bureau’s original investigation focused on Google’s exclusion of rival ad buyers from YouTube, by far the most popular streaming site in Canada. While a worthy effort, it was a narrow one. Rather than breaking open the drivers of Google’s dominance, the investigation appeared to be tailored towards what the bureau considered to be the surest win in court.

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In contrast, the expanded investigation announced earlier this year takes a much broader view of Google’s sprawling control of the digital advertising market, seeking to understand how Google might have abused its dominance and misled publishers and advertisers.

Think of the digital advertising market as a crowded stock exchange where ad space is auctioned in real time. On the sell-side, publishers use ad servers to put their advertising space on ad exchanges. On the buy-side, advertisers purchase that space off exchanges using advertiser ad networks and demand side platforms. Unlike a stock exchange however, Google has been allowed to accumulate a substantial position in each link of the chain: the sell-side, buy-side and the exchange at the centre of the transaction.

Looking at the entire digital ads supply chain, the bureau now seeks to understand whether Google has used its power to keep customers within its own walled garden and stifle the ability of rivals to compete fairly for the business of publishers and advertisers. At the same time the investigation is assessing whether Google engaged in the practice of predatory pricing, pricing below a sustainable level in the short term to drive out competitors, for its buy-side services and whether it deceived its own customers in its description of the workings of its digital ad products.

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The investigation makes use of the abuse of dominance provisions of the Competition Act, recently empowered by the passage of Bill C-56. Before the reforms, abuse of dominance investigations were few and far between, with the last litigated case brought in 2016 against the in-flight catering practices of the Vancouver Airport Authority. The Google probe signals a welcome shift towards tackling bigger monopolies more frequently.

The bureau’s investigation is reinforced by the U.S. Department of Justice’s comprehensive 2023 antitrust complaint against Google, set to head to trial this fall. The DOJ alleges that Google’s monopoly allows the company to capture more than 30 per cent of every ad dollar spent using its products, squeezing publishers and advertisers. Rather than a duplicative effort, the bureau’s investigation underscores the necessity for Canada to safeguard its own competitive landscape. Success in the U.S. does not guarantee remedies in Canada, as the bureau must independently demonstrate harm to Canadian markets to gain relief.

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Though encouraging, the Google investigation is a reminder of the limitations of the current state of competition law investigations in protecting competition. By its own admission the bureau has been investigating Google for four years, and there is no timeline for the resolution of this expanded investigation, let alone any possible litigation. Competition law investigations are complex undertakings, but publishers dependent on a competitive digital advertising market do not have another four years to wait under Google’s thumb. While the government has done an admirable job strengthening Canada’s competition law, it should now turn to the task of ensuring that law can be executed effectively and swiftly.

The power of the digital advertising giants has been evident in Canada for several years now, with campaigns championing the so-called open internet giving way to threats to block the news that keeps our democracy functioning. By pointing its new powers at one of the largest companies on the planet, the Competition Bureau sends a strong signal that a new competition cop is on the beat.

Postmedia News

Keldon Bester is the executive director of the Canadian Anti-Monopoly Project (CAMP) and a fellow at the Centre for International Governance Innovation (CIGI). 

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