Competition Law and Programmatic Advertising Market Power

1. Introduction

Programmatic advertising refers to the automated buying and selling of digital advertising inventory through technology-driven systems. Instead of advertisers negotiating individually with publishers, software and algorithms facilitate the process of matching advertising demand with available advertising space.

A simplified programmatic advertising ecosystem is:

Advertiser → Demand-Side Platform (DSP) → Ad Exchange/AdTech intermediary → Supply-Side Platform (SSP) → Publisher

Data, identity services, measurement tools and other intermediaries can operate across this chain.

Programmatic advertising creates significant competition-law questions because a small number of firms may control important parts of the advertising technology stack. Market power may arise from:

control over advertising data;

network effects;

economies of scale;

access to publishers and advertisers;

technological integration;

interoperability;

switching costs;

control of measurement and attribution;

vertical integration across several AdTech layers.

The central competition-law question is therefore not simply whether a firm has a large advertising business, but whether its position enables it to restrict competition, disadvantage rivals, extract supra-competitive terms, or leverage power from one part of the advertising ecosystem into another.

2. What Is Programmatic Advertising?

Programmatic advertising automates transactions involving digital advertising inventory.

A typical transaction can occur in milliseconds:

A consumer visits a website.

The publisher makes an advertising impression available.

Information concerning the impression is transmitted to advertising technology systems.

Advertisers or their DSPs determine whether to bid.

An auction or allocation mechanism determines the winning bid.

The advertisement is displayed.

Payment and measurement occur through the relevant AdTech infrastructure.

This automated process can involve numerous intermediaries.

3. Main Participants

A. Advertisers

Advertisers purchase advertising opportunities to reach consumers.

They may use DSPs to:

identify audiences;

select advertising inventory;

set bids;

measure campaigns;

optimise expenditure.

B. Publishers

Publishers supply advertising inventory.

They may use SSPs to:

manage advertising space;

connect with buyers;

conduct auctions;

optimise yield.

C. Ad Exchanges

Ad exchanges facilitate transactions between advertising demand and supply.

They may provide:

auction mechanisms;

matching;

pricing;

transaction infrastructure.

D. Data and Identity Providers

These firms can supply:

audience information;

identity resolution;

behavioural data;

measurement tools.

Control over these inputs can contribute to market power.

4. Why Programmatic Advertising Creates Competition Concerns

Programmatic advertising is particularly susceptible to competition concerns because the same company may operate several layers of the ecosystem.

For example:

Publisher tools → Ad exchange → Buyer tools → Measurement → Data

If one undertaking controls multiple layers, it may possess incentives and opportunities to favour its own services.

Potential concerns include:

self-preferencing;

discriminatory auction rules;

tying;

bundling;

foreclosure;

preferential access to data;

exclusion of rival intermediaries;

conflicts of interest in auctions.

5. Relevant Market Definition

One of the first questions in competition analysis is identifying the relevant market.

Possible markets include:

1. Display advertising

Advertising displayed on websites and applications.

2. Search advertising

Advertising associated with search queries.

3. Video advertising

Advertising delivered through video content.

4. Programmatic advertising technology

Technology used to automate digital advertising transactions.

5. DSP services

Services enabling advertisers to purchase advertising inventory.

6. SSP services

Services enabling publishers to sell inventory.

7. Ad-exchange services

Intermediary auction and matching services.

The exact market definition depends on substitutability and the competitive constraints facing the undertaking.

6. Multi-Sided Market Structure

Programmatic advertising is a classic multi-sided market.

An intermediary may simultaneously serve:

advertisers;

publishers;

agencies;

data providers.

Demand on one side can increase value on another side.

For example:

More advertisers → greater demand → more attractive inventory for publishers → more publishers → greater inventory → more attractive platform for advertisers.

This produces powerful indirect network effects.

7. Network Effects and Market Power

Network effects can create barriers to entry.

An established AdTech intermediary may possess:

large numbers of advertisers;

large numbers of publishers;

extensive historical data;

sophisticated algorithms;

established integrations.

A new competitor may have difficulty attracting both sides simultaneously.

Thus, even where entry is technically possible, effective entry may be difficult.

8. Data as a Source of Market Power

Programmatic advertising depends heavily on data.

Relevant data may include:

browsing behaviour;

contextual information;

audience characteristics;

advertising interactions;

conversion data;

publisher information;

campaign performance.

A large dataset can improve:

targeting;

prediction;

bidding;

measurement;

optimisation.

This can create a feedback loop:

More users → more data → better targeting → more advertisers → more revenue → greater scale → more users.

Competition authorities may therefore consider whether control of data reinforces durable market power.

9. Case Law: Google AdSense

European Commission — Google Search (AdSense) decision

The European Commission examined Google's conduct in online search advertising intermediation.

The case concerned contractual restrictions imposed on third-party websites using Google's search advertising intermediation services.

The Commission concluded that Google's practices restricted competition in search advertising intermediation.

Relevance

The case demonstrates how a dominant digital advertising intermediary can potentially use contractual arrangements to restrict competing advertising services.

The important concepts include:

exclusivity;

access to customers;

foreclosure;

contractual restrictions;

leveraging of market power.

Although AdSense concerned search advertising rather than every form of programmatic advertising, its principles are highly relevant to digital advertising ecosystems.

10. Google Android

European Commission / General Court

The Android proceedings concerned Google's practices involving mobile operating systems, applications and search services.

The competition analysis considered Google's ability to leverage its position in one part of the ecosystem into related markets.

Programmatic advertising relevance

The case demonstrates a broader ecosystem principle:

Market power in one digital layer can potentially reinforce power in another layer through contractual or technical integration.

For programmatic advertising, similar concerns can arise where a firm controls:

browser technology;

advertising services;

user data;

advertising exchanges;

measurement tools.

11. Google Shopping

European Commission / General Court

The Google Shopping proceedings concerned the treatment of Google's own comparison-shopping service in its search results.

The case is important for the concept of self-preferencing.

Programmatic advertising relevance

A vertically integrated AdTech firm could potentially face similar scrutiny if it gives its own:

exchange;

DSP;

SSP;

measurement service

preferential treatment over rival services.

For example:

Platform-controlled auction → platform-owned intermediary receives preferential treatment → competing intermediaries receive less favourable access.

Whether such conduct constitutes an infringement depends upon the applicable legal framework and evidence of competitive effects.

12. Microsoft v Commission

Court: General Court of the European Union

The Microsoft litigation addressed Microsoft's conduct concerning interoperability between its dominant operating system and competing work-group server products, among other issues.

The case is significant for the broader principle that a dominant technology ecosystem can affect competition in neighbouring markets through control over technical interfaces.

Programmatic advertising relevance

Advertising technology depends heavily upon:

APIs;

data flows;

identity systems;

technical integrations.

A dominant AdTech provider controlling a crucial interface could potentially disadvantage competing advertising technologies by:

restricting access;

degrading interoperability;

imposing discriminatory technical conditions.

The Microsoft jurisprudence therefore provides useful analytical context for digital infrastructure and interoperability.

13. Bronner v Mediaprint

Court: Court of Justice of the European Union

Bronner concerned access to a newspaper distribution system controlled by another undertaking.

The Court established stringent principles concerning refusal to provide access to infrastructure.

Relevance to AdTech

An advertising exchange, identity system, measurement infrastructure or other technological system might become extremely important to market participants.

However, market importance alone does not automatically establish a legal obligation to provide access.

The refusal-to-deal analysis requires consideration of factors such as:

indispensability;

duplication;

elimination of effective competition;

justification.

14. IMS Health v NDC Health

Court: Court of Justice of the European Union

IMS Health concerned access to a commercially important data structure.

The case is particularly relevant to programmatic advertising because data can be an important competitive input.

Relevance

If an undertaking controls an indispensable data resource, competition-law questions may arise concerning:

access;

interoperability;

exclusion;

intellectual-property rights;

downstream competition.

However, competition law must balance access concerns against incentives to create and maintain valuable data resources.

15. United Brands v Commission

Court: Court of Justice of the European Union

United Brands is a foundational case concerning dominance.

The Court considered whether an undertaking possessed sufficient economic strength to behave to an appreciable extent independently of competitors, customers and consumers.

Application to programmatic advertising

Market power in AdTech may depend upon more than market share.

Relevant factors can include:

network effects;

switching costs;

data advantages;

economies of scale;

vertical integration;

barriers to entry;

control over infrastructure.

Thus, a competition authority could examine the broader competitive structure of the programmatic advertising ecosystem.

16. Eturas v Lietuvos Respublikos konkurencijos taryba

Court: Court of Justice of the European Union

Eturas concerned a common online platform and the transmission of a restriction through the platform's technological infrastructure.

AdTech relevance

Programmatic advertising is heavily automated.

An advertising platform can communicate commercial parameters through:

algorithms;

auction rules;

APIs;

automated notifications;

bidding systems.

Eturas illustrates why technological systems can become relevant to competition-law analysis where they facilitate coordination among otherwise independent market participants.

17. Self-Preferencing in Programmatic Advertising

One of the most important theoretical concerns is self-preferencing.

Suppose Company X operates:

DSP X;

Ad Exchange X;

SSP X.

It also competes with independent DSPs and SSPs.

The company could potentially have incentives to:

rank its own DSP more favourably;

provide its exchange with preferential information;

give its own SSP better access;

favour its own bids;

provide its own services with faster technical access.

Competition authorities may investigate whether such conduct disadvantages rival services.

18. Auction Manipulation and Auction Design

Programmatic advertising relies heavily on auctions.

Competition concerns can arise where a platform controls the rules under which competing buyers or sellers interact.

Potential issues include:

discriminatory auction rules;

preferential bidding opportunities;

hidden fees;

conflicts of interest;

manipulation of ranking;

discriminatory access to information.

An important competition question is:

Does the platform act as a neutral intermediary, or does it use its control over the auction to advantage affiliated services?

The answer depends on the facts and applicable law.

19. Conflict of Interest

A vertically integrated AdTech provider may simultaneously act as:

buyer-side intermediary;

seller-side intermediary;

auction operator.

This creates a potential structural conflict.

For example:

Publisher → SSP → Exchange → DSP → Advertiser

If one company controls several of these stages, it may possess incentives to influence auction outcomes.

Competition analysis may therefore examine whether vertical integration:

creates efficiencies;

reduces transaction costs;

improves matching;

or instead:

forecloses rivals;

discriminates against competitors;

increases costs;

reduces transparency.

20. Tying and Bundling

An AdTech company may bundle several services:

DSP + data analytics + measurement

or:

SSP + exchange + identity service.

Bundling can produce efficiencies, but it can also raise competition concerns if a dominant undertaking uses market power in one product to foreclose competitors in another.

Important questions include:

Is one service dominant?

Are customers forced to purchase the second service?

Can customers use competing products?

Does the bundle exclude equally efficient rivals?

Are there objective efficiencies?

21. Exclusive Contracts

Exclusive agreements can produce significant effects in AdTech.

For example:

Publisher agrees to use only Platform X's advertising technology.

or:

Advertiser agrees to purchase programmatic inventory exclusively through Platform X.

Exclusive arrangements may create legitimate benefits, such as:

investment incentives;

technical integration;

guaranteed service;

reduced transaction costs.

But where a dominant undertaking uses exclusivity to foreclose competing intermediaries, competition concerns may arise.

22. Data Combination

Suppose a company operates:

a browser;

an advertising platform;

an analytics service;

a DSP.

It may possess information across all these services.

Combining data can potentially improve:

targeting;

attribution;

bidding;

prediction.

But if rivals cannot obtain comparable inputs, the data advantage may reinforce market power.

Competition analysis may therefore consider:

Does data integration represent efficiency-enhancing innovation, or does it create a durable exclusionary advantage?

23. Privacy and Competition

Privacy and competition can overlap.

A platform may compete partly through:

data protection;

privacy controls;

transparency;

user choice.

A reduction in privacy quality can potentially be relevant to competition analysis where privacy is an important parameter of competition.

However, privacy law and competition law remain distinct legal frameworks.

24. Interoperability

Programmatic advertising depends on interoperability between:

DSPs;

SSPs;

exchanges;

publishers;

identity providers;

measurement systems.

Restrictions on interoperability can increase switching costs.

A dominant intermediary could potentially disadvantage rivals by:

limiting API access;

restricting technical integration;

changing technical standards;

withholding necessary information.

The competition-law assessment would depend on whether the restriction produces exclusionary effects and whether legitimate technical reasons justify it.

25. Market Foreclosure

Foreclosure occurs where conduct makes it significantly harder for competitors to compete effectively.

In programmatic advertising, foreclosure could theoretically occur when a dominant undertaking controls access to:

major publishers;

advertisers;

data;

identity systems;

exchanges;

measurement infrastructure.

The relevant question is not merely whether competitors are harmed, but whether competition itself is materially restricted.

26. Vertical Integration

Vertical integration is particularly significant in AdTech.

A company may operate:

Publisher technology
↓
SSP
↓
Exchange
↓
DSP
↓
Advertiser services

Vertical integration may generate efficiencies through:

reduced latency;

improved matching;

better fraud detection;

lower transaction costs;

better measurement.

But it may also create incentives for:

discrimination;

self-preferencing;

foreclosure;

access restrictions.

Competition law therefore examines both sides.

27. Network Effects and Entry Barriers

New AdTech competitors may face several barriers.

Data barrier

They lack historical advertising data.

Scale barrier

Advertisers prefer platforms with large inventory.

Liquidity barrier

Publishers prefer platforms with many buyers.

Integration barrier

Customers have already integrated existing technology.

Reputation barrier

Large advertisers may prefer established systems.

Switching-cost barrier

Changing advertising infrastructure can be technically expensive.

These barriers can make an incumbent's market position persistent.

28. Merger Control in Programmatic Advertising

Acquisitions can reinforce concentration.

A major AdTech company acquiring:

an SSP;

DSP;

identity provider;

measurement company;

publisher technology company

could create vertical or conglomerate effects.

Competition authorities may consider:

existing overlaps;

vertical foreclosure;

data combination;

elimination of potential competition;

interoperability;

access to customers;

innovation effects.

The importance of merger control is especially significant where the target has relatively low current revenue but strategically important technology or data.

29. Indian Competition-Law Perspective

Under the Competition Act, 2002, programmatic advertising market power can potentially engage several provisions.

Section 3 — Anti-competitive agreements

Potential issues include:

coordination among advertising intermediaries;

information exchange;

restrictive vertical agreements;

exclusivity;

tying;

resale restrictions.

Section 4 — Abuse of dominant position

A dominant AdTech undertaking could potentially be examined for:

discriminatory conditions;

denial of market access;

unfair conditions;

leveraging;

tying;

exclusionary conduct.

However, dominance must first be established in the relevant market.

Combination regulation

Acquisitions involving AdTech companies may also be examined where the statutory thresholds and other legal requirements are satisfied.

The analysis can extend beyond horizontal overlaps to vertical relationships and ecosystem effects.

30. Competition-Law Analysis of a Programmatic Advertising Platform

A structured legal analysis can proceed through the following questions:

Step 1 — Define the relevant market

Is the market:

digital advertising;

programmatic advertising;

DSP services;

SSP services;

exchange services;

data services?

Step 2 — Determine market power

Consider:

market share;

network effects;

entry barriers;

data;

switching costs;

vertical integration.

Step 3 — Identify the conduct

Is the platform:

self-preferencing?

tying?

imposing exclusivity?

restricting interoperability?

discriminating?

refusing access?

combining data?

Step 4 — Assess competitive effects

Consider:

foreclosure;

higher costs;

reduced choice;

reduced innovation;

reduced quality;

increased barriers to entry.

Step 5 — Examine efficiencies

Consider whether the conduct produces:

lower transaction costs;

better matching;

improved security;

reduced fraud;

better technology;

innovation.

Step 6 — Assess proportionality

Even where efficiencies exist, the question may be whether the same benefits could be achieved through less restrictive methods.

31. Major Competition Risks

32. Key Case-Law Summary

33. Conclusion

Programmatic advertising market power is fundamentally an ecosystem and infrastructure issue. Competition does not occur solely between advertisers or publishers; it can occur between the technological intermediaries that connect them.

The principal competition-law concerns are:

market concentration;

network effects;

data advantages;

self-preferencing;

auction discrimination;

vertical foreclosure;

exclusive arrangements;

tying and bundling;

interoperability restrictions;

refusal to provide access;

algorithmic coordination;

data-driven barriers to entry; and

anti-competitive acquisitions.

The central analytical challenge is to distinguish legitimate technological integration and efficiency-enhancing innovation from conduct that exploits control over advertising infrastructure to exclude competitors or weaken competitive constraints. Cases such as Google AdSense, Google Shopping, Microsoft, Bronner, IMS Health, United Brands, and Eturas provide important doctrinal foundations for analysing these questions.