The British Competition and Markets Authority (CMA) said: Google's plan to remove external cookies from Google Chrome could cause a larger increase in advertising spending across Google's ecosystem at the expense of its competitors.
Cookies allow companies to follow users online so they can serve personalized ads.
Cookies have allowed newspapers and other media companies to serve customers through free content for years, but have also been criticized by privacy activists who consider them to be spammers.
Google said it plans to phase out cookies from the widely used Google Chrome web browser by 2022 through a series of changes known as Privacy Sandbox.
The British Competition and Markets Authority said it had received several complaints about how Privacy Sandbox had influenced competition.
Andrea Coscelli, chief executive of the British Competition and Markets Authority, said in a statement: "Google's Privacy Sandbox proposals are likely to have a very significant impact on publishers and the digital advertising market.
He added: "There are also privacy concerns to be taken int
o account, which is why we continue to work with the OFFICE of the British Information Commissioner (ICO) as we progress this investigation, while also directly engaging with Google and other market participants regarding our concerns.
The British Competition and Markets Authority has the power to fine Google up to 10 per cent of its annual revenue if it finds it has violated UK competition laws.
The fine could be as high as $4.6 billion, based on Google's 2020 sales volume of $46 billion.
The British Competition and Markets Authority said in July: About 80 per cent of the UK's total spending on digital advertising in 2019 went to Google and Facebook.
Google owns more than 90 percent of the UK search advertising market, according to the regulator, while Facebook controls more than 50 percent of the image advertising industry.
A Google spokesman said: Creating a more private web, with publishers and advertisers supporting free and open Internet, requires significant changes in the way digital advertising works.
He added: "Google welcomed the participation of the British Competition and Markets Authority as it worked on developing new proposals to support the ad-backed web without external cookies.
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