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Google’s ‘walled garden’ under regulatory scrutiny

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The UK Competition and Markets Authority (CMA) is launching a formal investigation into proposed changes to Google’s Chrome browser over concerns that the company could abuse its dominance in online advertising.

The investigation will look into proposed 'Privacy Sandbox' changes to Chrome, specifically how the proposed phase-out of support for third-party cookies and other functionalities from the browser could flatten competition. Google would then implement a new set of tools for targeted advertising and other functionality.

The CMA investigation follows complaints of anticompetitive behaviour and requests for the regulatory body to ensure that Google develops its proposals fairly.

Google has framed the changes as pro-privacy. It has agreed to collaborate publicly on the plans before its changes are implemented in 2022.

Online advertising is dominated by Google and Facebook, with the two US tech giants accounting for over 63 per cent of all advertising spending online - a lion's share that is still growing. The companies are facing mounting scrutiny from regulators and lawmakers in the US and EU over allegedly monopolistic practices.

“As the CMA found in its recent market study, Google’s Privacy Sandbox proposals will potentially have a very significant impact on publishers like newspapers, and the digital advertising market,” said Andrea Coscelli, chief executive of the CMA.

“There are also privacy concerns to consider, which is why we will continue to work with the Information Commissioner’s Office as we progress this investigation, while also engaging directly with Google and other market participants about our concerns.”

Online publishers such as newspapers rely on third-party cookies in order to target their advertising effectively and fund the creation of new, valuable content as an alternative to putting up paywalls.

“This is about the future of the Open Web and the threat that Google poses to its development,” said James Rosewell, director of Marketers for an Open Web, a group of newspaper publishers and tech companies concerned about anticompetitive practices which has raised these issues with the CMA.

“By launching this investigation, the CMA has recognised the seriousness of this issue. Privacy Sandbox would effectively create a Google-owned walled garden that would close down the competitive, vibrant Open Web.”

“Providing more directly identifiable, personal information to Google does not protect anyone’s privacy. We believe that the CMA’s investigation will confirm this and save the web for future generations.”

A Google spokesperson commented: “Creating a more private web, while also enabling the publishers and advertisers who support the free and open internet, requires the industry to make major changes to the way digital advertising works. The Privacy Sandbox has been an open initiative since the beginning and we welcome the CMA’s involvement as we work to develop new proposals to underpin a healthy, ad-supported web without third-party cookies.”

Google and Facebook have been encouraged to stop squeezing news publishers via their dominance in online advertising. However, Facebook has flatly rejected a code of conduct developed in Australia which proposes that internet companies pay original news publishers for the content from which they benefit.

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