The EU claims Google exploited online ad dominance with unfair practises.
On Wednesday, the European Commission accused Google of engaging in anti-competitive practises in the online advertising market and suggested that the company divest a portion of its ad services to ensure fair competition. This accusation comes after a two-year investigation into Google’s activities. The commission has given Google the opportunity to respond to this preliminary finding before a final decision is made. If the commission maintains its stance, it could potentially impose a fine of up to 10% of Google’s annual global revenues.
Google, a subsidiary of Alphabet, the U.S. tech giant, swiftly responded to the commission’s announcement. Dan Taylor, the vice president for global ads at Google, stated that the company disagrees with the commission’s findings and will provide a response accordingly. Alphabet reported revenues of $76 billion worldwide in the final quarter of 2022.
Margrethe Vestager, the Commission Vice President responsible for anti-trust matters, expressed concerns that Google may have illegally distorted competition in the online advertising industry, also known as adtech. She emphasised that the commission has not yet reached a final conclusion and is awaiting Google’s response.
The commission’s preliminary view is that divestiture is the appropriate solution since Google holds a dominant position both on the buy-side and sell-side of the online ad market. Google not only offers digital tools for placing various types of online ads but also acts as an intermediary between advertisers and publishers through its ad exchange, AdX, its ad server, DoubleClick, and its ad buying tools, Google Ads and DV 360.
The European Commission stated that it had preliminarily found evidence of Google abusing its dominant positions since 2014 by favouring AdX in ad purchases via DoubleClick, Google Ads, and DV 360. These actions may have been intentional and aimed at giving AdX a competitive advantage while marginalising rival ad exchanges and enabling Google to charge higher fees in its adtech supply chain.
The commission’s preliminary findings align closely with an anti-trust lawsuit filed against Google by the U.S. government in January.
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