The European Union has accused Google of making “abusive practices in your online advertising technology“, which could lead to the company being forced to divest its advertising division, and having to create a separate company in charge of everything related to the company’s Internet advertising.
According to the European Commission, since Google is unlikely to change its behavior on this issue, the competition concern could only be addressed by “mandatory divestment» of a part of its services.
As highlighted by the Vice President of the European Commission Margrethe Vestager«Google is present at virtually every level of what is known as the ad technology supply chain. Our main concern is that Google may have used its market position to favor its own brokerage services. This not only potentially harmed Google’s competition, but also hurt publishers’ interests, as well as increasing advertisers’ costs.«.
The EU isn’t the only place where Google’s advertising business is facing problems. Earlier this year, the US Department of Justice sued Google to get the company to divest itself of its advertising division, accusing them of illegally monopolizing the market. This forced ad-tech rivals out of the market, as well as deterring potential new entrants from entering it, and leaving the few remaining competitors behind.”marginalized and unfairly disadvantaged“, according to the US regulator.
In the European Union they have pointed out that Google is dominant in virtually all parts of ad technology, through services for both advertisers and publishers, along with a trading marketplace called Google AdX (Google Ads Exchange). In principle there should be no problem with this, but according to the EU, Google is abusing its market position by making sure that its brokerage tools on the buy and sell side favor its own buying and selling market.
This leads to the European Commission being «concerned about two potentially anti-competitive behaviors by Google that favor AdX«. In one case, for example, AdX was able to bid after others had already bid, and in another, it was informed in advance of the value of its rivals’ best bids. On the supply side, Google Ads bid almost exclusively in its own market, giving it a significant advantage over other competing markets, according to the EU.
Therefore, the Commission believes that any solution that asks Google to change its behavior would have no effect. This is what leads, as it appears in the Commission’s preliminary vision, to ensure that “only Google’s mandatory divestment of part of its services would put an end to its concerns about competition«.
In addition to being forced to create a separate company with its online advertising arm, Google could face a fine of up to 10% of its annual global revenue, which it could appeal.
Until we see if that is the case, Google has pointed out, among other things, that “The European Commission’s Statement of Objections makes claims that are not new, and that relate to a small part of our advertising business. Failed to recognize how advanced advertising technology helps marketers reach their customers and grow their business by lowering their costs and increasing consumer choice. We look forward to demonstrating how we have enabled higher quality and more effective digital advertising, which has helped fund better access to online content and information for all.«.
