The European Commission has taken a significant step in its antitrust investigation against Google by filing a formal complaint against the tech giant and its ad business.
The Commission’s preliminary view is that the only solution to address competition concerns is Google’s mandatory divestment of certain services. The complaint targets the core source of Google’s advertising business revenue.
According to Margrethe Vestager, the Commission’s executive vice president in charge of competition policy, there is a preliminary concern that Google has used its dominant market position to favour its own intermediation services.
The report finds that Google had abused its dominant position in the ad market by “favouring its own ad exchange AdX in the ad selection auction run by its dominant publisher ad server DFP by, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.”
Furthermore, Google Ads avoided competing ad exchanges and placed bids on AdX, thus making it the most attractive ad exchange.
Issuing the statement of objections marks an important milestone in the EU’s investigation. Google will have the opportunity to respond in writing and request a hearing, following which the Commission will decide whether Google has violated antitrust laws in the European bloc. If found guilty, Google could face fines of up to 10 per cent of its global sales and be compelled to alter its operating practices.
The European Union’s investigation into Google’s advertising technology commenced in 2021, focusing on whether Google unfairly prioritizes its services, restricts access to user data for competitors, and obstructs rival online advertising services in the ad tech stack.
This would mark the fourth major penalty imposed on Google by the EU if found to be in violation. Previous fines, totalling over €8 billion, were issued for actions such as favouring its own shopping comparison service, bundling its search engine and Chrome apps on Android devices, and impeding AdSense customers from accepting rival search engine advertising. Google is currently contesting these previous fines in court.
The advertisement business of Google makes up the primary chunk of the tech giant’s earnings. As per Bloomberg, the advertisement business of Google generated about $225 billion in 2022.
Outside the EU, Google’s advertising practices are also under scrutiny. The UK’s Competition and Markets Authority (CMA) has been investigating the company for potential unfair treatment of competitors. In the US, the Justice Department and eight states have filed a lawsuit, advocating for the breakup of Google’s ad-technology business.
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