The European Commission this morning found that Google breached EU antitrust rules by distorting competition in the ad tech industry. If the charges are proven, Google could be forced to sell part of its ad tech business.
The Commission has published a Statement of Objections, concluding that Google favours its own ad tech services to the detriment of competing vendors, as well as advertisers and online publishers. The preliminary findings follow a two-year investigation that saw the European Commission cooperate with competition authorities in the US and UK.
Google owns a 28 percent market share of global ad revenue, according to Insider Intelligence, making it the world’s dominant digital advertising platform. The company sells advertising while acting as an intermediary between advertisers and publishers, which allows it to control “both sides of the ad tech market,” said Margrethe Vestager, European Commissioner for Competition.
The company’s ad buying tools, Google Ads and DV360, were also revealed to favour AdX when placing bids. This meant Google Ads could avoid competing ad exchanges and place most of its bids on AdX, thereby making it the most attractive ad exchange. These practices may have foreclosed rival ad exchanges, according to the regulator, enabling Google to charge higher fees.
Caught in the (Competition) Act
The Commission argued that behavioural commitments would be insufficient in resolving the antitrust issues. “The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns,” the regulator said.
.@Google controls both sides of the #adtech market: sell & buy. We are concerned that it may have abused its dominance to favour its own #AdX platform. If confirmed, this is illegal. @EU_Commission might require Google to divest part of its services.https://t.co/6SwdoLlN8a pic.twitter.com/2rZok2BWYs
— Margrethe Vestager (@vestager) June 14, 2023
If proven, the charges amount to an infringement of Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant market position. Google has the right to respond to the Statement of Objections, and the Commission will determine if there is sufficient evidence of infringement. The regulator can then impose its decision, and a fine of up to 10 percent of the company’s annual worldwide turnover.
Forcing the tech giant to divest its ad tech stack would have enormous ramifications for the company and the digital advertising industry; Google’s ad tech business accounted for 79 percent of its total revenues last year. But such a move would likely come years down the line, as the Commission states: “There is no legal deadline for bringing an antitrust investigation to an end.”
