Google has been accused of creating an “existential threat” to internet retailers with its grip on digital advertising as US prosecutors announced a competition probe into the company.

The inquiry, announced in Washington, will assess whether Google’s control of digital advertising has limited smaller businesses and harming consumers as a result.

The investigation, launched by attorneys general for 48 states, Washington DC and the US territory of Puerto Rico, will test claims that Google’s dominance, from the way it chooses to show links in its search engine to the technology that decides what links should be there, is unfairly rigged against smaller players.

It highlights growing scepticism of Google’s business practices, following years of little scrutiny within the US.

“There is an absolutely existential threat to our virtual marketplace," said Jeff Landry, Louisiana’s attorney general. "Let’s say we go back before the invention of television. Would we allow one person to own all of the printing ink, the printing press and the paper used to print newspaper? The answer is absolutely not, because if someone had tried to monopolise the entire industry the government would have disallowed it.”

Doug Peterson, the attorney general for Nebraska, described the historic probe as “a big deal” adding that, “when 50 Attorney Generals come together they send a strong message to Google”.