The digital advertising tool proposed by Google is currently being investigated for competition concerns to add new weight to the strain of antitrust issues facing the tech giant and its peers like Facebook
The Competition and Markets Authority [CMA], a UK regulator, will look into proposing a new digital advertising technology from Google owned by Alphabet
will damage competition by focusing advertising spending even more on the internet company's ecosystem.
The CMA said Friday that the investigation follows a complaint from a group of newspaper publishers, marketers and tech companies. This group, called Marketers for a Open Web or MOW, claims that Google is abusing its dominant position in the advertising market.
The complaint focuses on how user data is exchanged between Google and third parties like online publishers who make money from digital advertising. Currently, these groups can access valuable data about users' online activities through Google's Chrome web browser. However, the new tool would prevent access to this data.
The proposed tool is called Privacy Sandbox. According to Google, it is a framework for serving targeted advertising without personal user data falling into the hands of third parties.
The Privacy Sandbox would replace cross-site tracking with cookies, which is data downloaded from websites when users visit them, and ultimately remove the ability for third parties to track users with cookies.
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"Google's proposals on privacy in the sandbox have the potential to have a significant impact on publishers such as newspapers and the digital advertising market," said Andrea Coscelli, chief executive of CMA.
"However, there are also privacy concerns to be considered, so we will continue to work with the [Information Commissioner's Office] as we continue this investigation while speaking directly to Google and other market participants about our concerns," said Coscelli.
The CMA's decision to open an investigation follows a November 2020 complaint by MOW calling on the CMA to legally block the introduction of the privacy sandbox.
"Privacy Sandbox would effectively create a Google-operated walled garden that would shut down the competitive, vibrant open web," said James Rosewell, director of MOW.
"Providing directly identifiable personal information to Google does not protect individual privacy. We believe the CMA investigation will confirm this and save the Internet for future generations," said Rosewell. "This investigation is for the future of everyone online – Critical businesses, including publishers, technology companies, and advertisers. "
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One of the changes that would be initiated by the Privacy Sandbox would include blocking online news publishers' access to the cookies they need to serve ads on their platforms, MOW said. This would cut revenue for publishers by up to two-thirds, the group said, citing a study by the CMA on digital platforms and advertising last summer.
In July 2020, the CMA published a study on online advertising and digital platforms that described how Google and Facebook are dominating online search, social media, and advertising, enjoying the benefits of tenure over competitors protect and reduce competition.
A Google spokesperson told MarketWatch, "In order to create a more private web, while empowering the publishers and advertisers who support the free and open Internet, the industry needs to make significant changes to the way digital advertising works."
The spokesman added, "The Privacy Sandbox has been an open initiative from the start. We welcome the CMA's involvement in developing new proposals to support a healthy, ad-supported web without third-party cookies."
The CMA has recommended the UK government to introduce a new pro-competitive regulatory system specifically targeting the market power of Google and Facebook.
In November 2020, the UK government announced that it would create a digital markets division within the CMA to oversee pro-competitive reforms in the technology sector. The new unit will start operations in April 2021.