EU regulators have taken a firm stance against Google, indicating that the tech giant may be required to divest a portion of its adtech business due to concerns over anti-competitive practices. The European Commission’s statement of objections comes after a two-year investigation into Google’s favoritism toward its own advertising services, potentially resulting in a hefty fine of up to 10% of the company’s annual global turnover.
With the adtech business accounting for a significant 79% of Google’s total revenue last year, the implications of this clash with regulators are substantial. The European Commission contends that Google has abused its dominant position by giving preferential treatment to its ad exchange AdX in ad selection auctions, as well as favoring AdX in bid placements through its ad buying tools Google Ads and DV360.
Margrethe Vestager, the EU antitrust chief, expressed skepticism about the effectiveness of behavioral remedies and suggested that a partial sale of Google’s adtech business, specifically its sell-side tools DFP and AdX, may be necessary to address conflicts of interest.
Google has disagreed with the Commission’s charges, emphasizing that the investigation focuses on a limited aspect of its advertising business and is not novel. The company’s vice-president of global ads, Dan Taylor, stated their stance in a released statement.
In addition to the ongoing investigation, regulators will scrutinize Google’s privacy sandbox tools, which aim to block third-party cookies on the Chrome browser, as well as its plans to limit access to the advertising identifier on Android smartphones.
The charges filed by the European Publishers Council, which lodged a complaint against Google last year, have been welcomed by the Commission. It alleges that Google’s favoritism toward its own online display advertising technology services has come at the expense of competing providers, advertisers, and online publishers.
As the world’s dominant digital advertising platform with a 28% market share of global ad revenue, Google’s practices in the advertising sector are under close scrutiny. The case, which initially entered settlement negotiations, has progressed slowly, leading to regulators’ frustration with the lack of substantial concessions from Google.
The investigation continues, with cooperation expected between EU and US competition authorities. Further examination of Google’s actions in the advertising landscape remains a key focus. – source: Reuters
14 June 2023
