Competition Bureau, Google accuse each other of ignoring ‘commercial reality’ in ad market suit

The Competition Bureau and Google are butting heads over how the online advertising market is structured, according to the watchdog’s recent filing to Canada’s Competition Tribunal. Competition Commissioner Matthew Boswell on March 28 submitted a rebuttal to the Alphabet Inc. subsidiary’s arguments, in which he doubled down on the allegations made in his application to the tribunal in November. Boswell challenged Google’s view of the advertising sector, as well as its stance that the remedies he is seeking are inappropriate and unjustified. The bureau reiterates arguments made in its original application that there are three relevant product markets, “made up of functionally distinct services,” used in buying and selling online advertising: the Publisher Ad Server market; the Advertiser Ad Network market and, the Ad Exchange market. Google, however, asserts that the ecosystem is made up of a single two-sided market, made up of a “buy-side” and a “sell-side.” This view “ignores commercial reality,” says the Competition Bureau in its latest response, rebuking the company’s position that the bureau is attempting to “gerrymander” the market into a “narrow subset of digital advertising.” According to the Competition Bureau, in the world of online web advertising, publishers sell ad space on their websites to advertisers using platforms known as ad tech tools. The collection of tools used throughout the buy-and-sell process are known as the ad tech stack. The watchdog alleges that Google has abused its dominant position in online advertising by locking market participants into using the ad tech tools that it owns across the stack, illegally tying the tools together, excluding competitors, and distorting the competitive process. The ad tech tools in question include what the bureau calls a “publisher ad server” formerly known as Doubleclick for Publishers (DFP), which Google says is used by publishers to manage their ad inventory; a tool called Google Ads, which Google says is used by advertisers to purchase ad inventory from publishers; and AdX, an ad exchange that supports the buying and selling of ad inventory through an automated auction process. In addition to paying a fine, the Competition Bureau wants Google to sell off DFP and AdX. Google says it combined the functionalities of both tools into a single user interface called “Google Ad Manager” in 2018. Google’s definition of the sector “erroneously seeks to fuse together separate markets for functionally distinct, non-substitutable ad tech services, purchased by different parties, into a unitary two-sided platform market,” maintains the bureau, adding that Google’s submission describes the market in “vague terms.” The commissioner contends that the relevant markets are defined by whether users can substitute different products and services. In this case, he argues that publishers have to use “sell-side” tools, while advertisers have to use “buy-side” tools, challenging Google’s stance that many ad tech tools compete with each other and are “functionally interchangeable.” “That these sell-side and buy-side tools are used by different parties along with other tools, including ad exchanges, to ultimately achieve an end — the purchase and sale of advertising space — does not make them substitutes for one another,” the commissioner argues. “The fact that a screwdriver can be used with pliers to fasten a nut to a bolt, does not make pliers and a screwdriver substitutes for one another.” DFP is a distinct sell-side tool, while Google Ads is a distinct buy-side tool, the bureau alleges, “which along with AdX, form part of Google’s ad tech ecosystem. Google has used its dominance and anticompetitive conduct to lock advertisers and publishers into that system,” it alleges. The commissioner also takes issue with Google’s argument that the market encompasses “all types of digital advertising,” an argument that he says incorrectly suggests that all digital advertising is “substitutable,” regardless of what kind it is or where it is published. The remedies sought by the bureau are appropriate and within the tribunal’s jurisdiction because they are in line with the Competition Act, the commissioner argues, adding that even if the bureau is charging Google with conduct that allegedly began over three years ago, the company allegedly continues to engage in it. The commissioner also claims that Google “mischaracterizes” the monetary penalty, raising an “ill-conceived constitutional challenge.” Google, meanwhile, argues that the fine requested by the bureau — equal to three times the value of the benefit derived from the alleged anti-competitive practices, or three per cent of Google’s worldwide gross revenues — could amount to billions of dollars and is so high that it should be considered a punitive measure. Despite the hefty amount, the commissioner argues in his response that both the divestiture and the fine are appropriate and necessary measures that fall within the limits of the Competition Act. They are not meant to punish Google, but are meant to address the company’s alleged anti-competitive conduct. Contrary to Google’s stance, the remedies also do not violate the Canada–United States–Mexico Agreement (CUSMA), the commissioner argues. He claims that they are actually “in harmony” with the free trade agreement. “CUSMA expressly recognizes Canada’s ability to apply its national competition laws to commercial activities outside its borders,” the watchdog states. None of the allegations has been tested in court. phalentm@thewirereport.ca

Competition Bureau, Google accuse each other of ignoring ‘commercial reality’ in ad market suit

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By Phalen Tynes-MacDonald
| April 3, 2025

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Competition Bureau, Google accuse each other of ignoring ‘commercial reality’ in ad market suit

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