EU may dismantle Google’s advertising business due to antitrust infringements

The EU Commission has issued a statement of objections accusing Google of engaging in “abusive practices in online advertising technology” that may result in the division of its ad business. The commission has preliminarily determined that Google is unlikely to alter its conduct, and that the only way to address competition concerns is through the “mandatory divestment” of some of its services.

“Google is present at almost every level of the so-called adtech supply chain,” CEO Margrethe Vestager said in a statement. “Our initial concern is that Google may have used its market position to favor its own mediation services. This not only harmed Google’s competitors, but also publishers’ interests, while increasing costs for advertisers.”

Google’s advertising business is now under attack on several fronts. Earlier this year, the US Department of Justice (DoJ) sued Google to break up its advertising business, accusing it of illegally monopolizing the market. That, in turn, forced major ad tech competitors out of the market, forgoing new subscriptions and left the few remaining competitors “marginalized and unfairly disadvantaged,” the regulator said.

There is nothing wrong with being dominant as such. What our investigation has shown though, is that Google appears to have abused its market position. It did so by ensuring that both its intermediation tools on the buy- side and on the sell-side would favour AdX in the “matching” auctions.

The EU Commission said that Google has a dominant position in virtually all aspects of adtech, both through its services for advertisers and publishers, as well as through an ad exchange called AdX. That would be great in itself, but it accused Google of abusing its market position by ensuring that both buy-side and sell-side brokerage tools favored their own exchange. “In other words, we are concerned about two potentially anticompetitive practices by Google, both related to favoring AdX,” the commission wrote.

In one case, AdX was able to bid after all other bidders had done so, and in the other, it was informed in advance of the value of its competitors’ best bids. On the supply side, Google Ads made offers almost exclusively on its own exchange, which according to the EU gives it a significant advantage compared to competitors’ exchanges.

The commission said any remedies requiring Google to change its behavior would be ineffective. “The Commission’s preliminary view is therefore that only Google giving up some of its services would eliminate its competition problems,” according to the statement of objections.

Google can now respond to the complaint before the verdict. In addition to the split, the company could face a fine of up to 10 percent of its annual global revenue, pending appeals. It is unusual for the EU to propose any remedies before a guilty verdict, the Wall Street Journal noted. ReturnByte has asked Google for a statement.