Last week, Canada’s Competition Bureau sued Google, one of the largest companies on the planet, for abusing its dominant position in online advertising, a market that touches nearly every corner of the economy.
Though the case alone is news, more important is the growing trend of the Competition Bureau shifting its focus to where competition matters most for Canadians amid an ongoing cost of living crisis.
The Google case is important because the vast majority of advertising is online advertising. Though its rise may be levelling off, in Canada, online advertising made up over 70 per cent of the $20-billion advertising market in 2022, an estimated half of which is represented by Google’s business. Though less front-of-mind than rising costs at the grocery checkout, competition in advertising can affect the price of goods and services throughout the economy.
Businesses large and small depend on online advertising to reach potential customers and a monopolized market means higher costs to make that connection. The Competition Bureau alleges that Google has thrown sand in the gears of competition and enriched itself at the expense of Canadian businesses and consumers, effectively levying a private tax on every market that depends on advertising. A more competitive online advertising market would mean a better return for any companies looking to advertise and more revenue for the companies whose bottom line depends on ad revenue.
Taking on a company with a market cap of over US$2 trillion (C$2.8 trillion) is already big news, but to understand the true significance of the Google case we need to look at the last time the bureau went to the mat to stop an alleged abuse of dominance.
Eight years ago, the bureau attempted to protect competition in a much narrower slice of the Canadian economy: food on flights out of the Vancouver airport. By limiting the choice of in-flight catering companies, the bureau argued the Vancouver Airport Authority had violated Canada’s competition law. While Canadians appreciate choices beyond chicken or pasta during flights, rather than pursuing conduct with the greatest potential harm to Canadians, the bureau instead appeared to be going after what it thought was a slam-dunk case.
Compare the bureau’s past pursuit of airplane meals with its current roster of ongoing investigations. Property controls used by major grocers to limit where competitors can set up shop. Software that could be facilitating price-fixing by gas stations. Whether rules set by realtor associations hurt competition on commissions for home sales. Along with the Google case, these investigations show a shift in focus towards markets that shape the lives of Canadians across the country.
In doing so, the bureau is following its international peers in providing a stronger defence of competition. Last week also saw the United States Department of Justice deliver its closing arguments in its own case against Google’s online advertising monopoly. Rather than a duplicative effort, the Competition Bureau’s parallel case is intended to protect Canadian consumers, businesses and publishers. Absent a global break-up remedy arising from the U.S. case, Google would be free to continue any anti-competitive practices outside the United States without a homegrown challenge.
By filing the case against Google and expanding its roster of important investigations, the Competition Bureau is making good use of the stronger laws provided by Parliament earlier this year. Rather than finding cases that best fit the narrow confines of Canada’s old competition law, the bureau is testing how the new law can deliver broad-based returns for Canadians.
The case against Google is anything but a sure bet. While a U.S. judge declared the company a monopoly earlier this year, Google has unmatched legal resources to convince Canada’s Competition Tribunal otherwise. But compared to the airplane food fights of the past, it’s clear that today’s bureau is responding to Canada’s monopoly moment.
National Post
Keldon Bester is the executive director of the Canadian Anti-Monopoly Project and a fellow at the Centre for International Governance Innovation.