The European Union (EU) officials have accused Google of engaging in anti-competitive practices and called for a break-up of the search engine giant’s sprawling digital advertising business.
On Wednesday, the EU charged Google with violating antitrust regulations in ad-tech (advertising technology), saying it creates “inherent conflicts of interests” that pose risks to competition in the market. The regulators called for the dismantling of Google’s core lucrative business to alleviate increasing concerns stemming from Google’s dominance over the digital advertising market across the EU.
Calling for the break-up of its ad-tech business has to be the harshest threat for Google from EU regulators. The tech giant has already faced similar threats from the US Department of Justice. The DOJ, long with eight states, sued Google earlier in January, accusing Google of actively maintaining illegal dominance over the digital advertising market by abusing its power and engaged in anti-competitive practices.
The European Commission has sent out its statement of objections to Google, accusing it of breaching the EU antitrust laws by distorting competition in the advertising technology industry. According to the statement, Google “sells advertising space on its websites and apps” and “intermediates between advertisers that want to place their ads online and publishers (i.e. third-party websites and apps) that can supply such space”.
The Commission’s preliminary view is that only the mandatory divestment by Google of part of its services would address its competition concerns, the statement says.
The investigation into Google’s ad-tech business, which was initiated two years ago, could fetch Google fines worth up to 10 per cent of its global annual revenue. Digital advertising is Google’s primary source of revenue, earning the tech firm billions of dollars globally, and strengthening its position as one of the most powerful tech corporations in the world.
The European Commission has expressed concern that Google’s allegedly intentional conducts are aimed at giving its ad-tech business a competitive advantage, which may have impeded rival ad exchanges in the digital ad space. “This would have reinforced Google’s AdX central role in the ad-tech supply chain and Google’s ability to charge a high fee for its service,” the statement adds.
Responding to the development, Google voiced its disagreement over the charges.
“The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new,” said Dan Taylor, vice president of global ads at Google. “We disagree with the EC’s view.”
Google has been given a few months’ time to respond to the charges. The company can either ask for a closed hearing before the EU antitrust officials or offer more stringent efforts to address its monopoly over the ad-tech business.
In 2022, Google’s advertising revenue from its various services, including Google Play, Google Maps, YouTube ads, Google Ad Manager, and Gmail, reportedly totalled $224.5 billion.
