The UK competition watchdog is investigating whether Google’s attempts to tighten privacy controls in its Chrome web browser are also harming smaller online advertising groups.

The Competition and Markets Authority said on Friday that it would investigate complaints that the internet group’s plans to remove third-party tracking “cookies” from its browser amounted to an abuse of Google’s dominant position and could concentrate advertising spend on its own systems.

Cookies allow businesses to target advertising at internet users but have attracted controversy from critics who say they infringe consumer privacy. Google has said it plans to phase out cookies altogether from its popular Chrome browser by 2022.

The probe is a forerunner to the kind of work that the new Digital Markets Unit, a tech-focused regulator sitting within the CMA, will handle when it is established, which is expected later this year.

It is the latest clash between dominant tech companies using privacy as a justification for product updates and critics who claim they are using data protection as an excuse to steamroller smaller advertising companies that rely on gathering personal information.

It follows the CMA’s study of the digital advertising market, which found last year that 80 per cent of the UK’s £14bn online ad spend went to Google and Facebook, a dominance that it said created barriers to entry, unequal access to data and potential conflicts of interest.

Andrea Coscelli, chief executive of CMA, said: “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.

“But 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.”

The CMA has the power to impose interim measures which would halt Google from rolling out its new technology. It could also fine the company up to 10 per cent of global turnover if it was found to have infringed UK competition law. Other, less serious, sanctions could include agreeing legally binding commitments with the company.

“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,” Google said on Friday. “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’s Chrome browser is used by more than 60 per cent of desktop and mobile users, according to Statcounter, which tracks online market share. Its Sandbox will include a range of different tools to track users across the web and target them with personalised ads, but critics say it places them under greater control by Google, compared with using cookies on the open web.

Google claims the shift will boost users’ privacy, but lobby groups including Marketers for an Open Web urged the CMA to step in and prevent the tech giant from owning the means by which media companies reached consumers.

“Privacy Sandbox would effectively create a Google-owned walled garden that would close down the competitive, vibrant Open Web,” James Rosewell, director of MOW, said in a statement. “Providing more directly identifiable, personal information to Google does not protect anyone’s privacy.”

Amid a broader worldwide crackdown on Big Tech from antitrust agencies and privacy watchdogs, there is increasing tension between the separate regulatory agencies and their priorities. The CMA said it was working with the UK’s Information Commissioner’s Office and Ofcom to make sure regulators are considering both aspects.

Similar concerns have been raised about Apple, which has been tightening privacy restrictions across its products for several years. Facebook and some advertising groups have accused Apple of wielding privacy as an anti-competitive weapon, by requiring users of individual apps to opt in to ad-tracking in the latest version of the iPhone’s operating system.

Google has already started rolling out its project, but the final proposals have not been decided or implemented.