The European Commission has opened a formal antitrust investigation against Google to scrutinise its advertising business and examine if the company favours its own businesses, putting rivals at a disadvantage.
The antitrust probe will “assess whether Google has violated EU competition rules by favouring its own online display advertising technology services in the so-called ‘ad tech’ supply chain, to the detriment of competing providers of advertising technology services, advertisers and online publishers,” the European Commission said in a statement on Tuesday.
The Commission’s investigation will examine Google’s Display & Video 360 and Google Ads purchase for online advertisements on Youtube, Google Ad Manager, Privacy Sandbox (replacement of third-party cookies) and Google’s ad exchange ‘AdX’. It will also look into the restrictions placed by Google on third parties to access data available to Google’s own services, including Doubleclick ID. Google’s recent move to restrict third parties from accessing advertising identifiers on Android when a user opts out will also be scrutinised.
In 2019, an estimated €20 billion was spent on display advertising in the EU. According to Alphabet, Google’s advertising brought in a revenue of $46.2 billion in Q4 2020, which is a major chunk of the $56.9 billion total revenue the company recorded that quarter.
Why is Google being investigated?
Outside of the general accusation of being unfair to the competition, the Commission is investigating Google for the following.
- The Obligation to use Google services (namely Display and Video 360) or Google Ads to display ads on Youtube.
- The obligation to use Google Ad Manager to serve ads on Youtube as well as the potential restrictions placed by Google on Google Ad Manager rivals on their ability to serve ads on Youtube.
- The favouring of Google’s AdX by DV360 and/or Google Ads and vice-versa.
- The restrictions placed by Google on the ability of third-parties and rivals on the access of user data regarding identity and user behaviour which is available to Google’s own services.
- Google’s plan of replacing cookies on Chrome and replacing them with a ‘privacy sandbox’ instead including the effects on online display advertising and display advertising intermediation markets.
- Gooogle’s plans to stop making the advertising identifier available to third parties on Android should a user opt-out of personalised advertising including the effects this practice will have on the online ad market.
What does this mean for Google?
This isn’t the first time Google’s ad tech business has come under the spotlight, either. In the last decade, Google has been fined more than $9.7 billion in three different antitrust cases by the European Commission’s Executive VP in charge of competition policy Margrethe Vestager.
“Google is present at almost all levels of the supply chain for online display advertising. We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack. Fair competition is important – both for advertisers to reach consumers on publishers’ sites and for publishers to sell their space to advertisers, to generate revenues and funding for content. We will also be looking at Google’s policies on user tracking to make sure they are in line with fair competition,” said Margrethe Vestager.
No legal deadline has been announced for the official probe by the Commission.
If Google is found guilty of anti-competitive behaviour, it’ll breach EU competition rules on anti-competitive agreements between companies under Article 101 of the Treaty on the Functioning of the European Union (TFEU) or on the abuse of a dominant position (Articles 102 TFEU).
“Online advertising services are at the heart of how Google and publishers monetise their online services. Google collects data to be used for targeted advertising purposes, it sells advertising space and also acts as an online advertising intermediary,” Vestager added.
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