Google could be forced to sell parts of its advertising business

Martin Brinkmann
Jun 13, 2023
Updated • Jun 13, 2023

Google's parent company Alphabet could be forced to sell part of its advertising business by the European Union, according to a Reuters report on the matter. Reuters claims that the information comes from a "source with direct knowledge of the matter".

The European Commission could issue a formal complaint against Google this week, according to Reuter's source. Google paid billions in fines in the past already, but this had not affected Google's dominant position in the online advertising industry.

Most of Alphabet's earnings come from advertising. In the first quarter of 2023 alone, earnings amounted to $54.55 billion and Alphabet's total earnings to $69.79 billion. Google is the dominating player in online advertising, with a market share of about 28%.

Meta, parent company of Facebook, comes in second. In 2022 in the United States, Google captured 28.8% of digital ad revenue and Meta 19.6% of the digital ad revenue. While the situation is changing, as new players, such as Amazon and TikTok, are increasing their share of the market, it is changing slowly only.

The European Commission is dissatisfied with Google, as the company failed to address the concerns of competitors, according to Reuter's source. Competitors argue that Google is using its dominance in the advertising market, as well as its web browser dominance, to gain control over key advertisement technologies in the coming years.

Google has been working on pushing a new advertising system, which it calls euphemistically Privacy Sandbox, into Chromium, the core of Google Chrome and most other browsers. Privacy Sandbox will replace third-party cookies support in Google Chrome in 2024. Third-party cookies are used widely today in advertising, to track sales but also track users.

The removal of third-party cookies support moves the tracking directly into the browser. Tracking, according to Google's plan, will happen directly in the browser, which Google more or less controls. While the new technology offers some improvements for users, like the moving from individual user tracking to group-based tracking, it is clear that users will still be tracked when they are on the Internet.

The European Union is not alone when it comes to addressing the dominance of Google and Meta in the online advertising market. In the United States, a bipartisan group of lawmakers aims to "tear down the wallet gardens" and break up the advertising arms of the two companies.

Depending on if and how this progresses, it could shake up the entire online advertising market. For users, it could lead to more user-friendly technologies being implemented in Chromium, as that part of Google might no longer have any interest in weighting advertising interests against user interests.

Now You: what is your take on this?

Google could be forced to sell parts of its advertising business
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Google could be forced to sell parts of its advertising business
Google's parent company Alphabet could be forced to sell part of its advertising business by the European Union, according to a Reuters report on the matter.
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  1. Anonymous said on June 15, 2023 at 4:55 pm

    The first-party/third-party division is evidently not recognised by data protection authorities or law. More critically still, the argument that does not stand up to even the most cursory logical interrogation. The idea that the processing of personal data derived from transactions between users and Google’s products is somehow inherently less privacy sensitive than de-identified information used by third parties is difficult to square. Indeed, when Bill Taylor in Ruislip books a flight to Paris on his Android phone, it is only Google who can access his email, phone number and other identity-specific information; third-party advertisers process de-identified data. Bill is now user 123456789, who might be interested in a number of ads for museum passes or hotels. If Bill was at all guarded about his privacy and had all the facts to hand, he might indeed conclude first-party data processing was more invasive than third-party processing.

  2. owl said on June 14, 2023 at 1:45 pm

    It is futile to seek morals from a stock company that has monopolized the market.
    Google (a subsidiary of Alphabet Inc. since 2015 owned by Alphabet Inc.), which has grown so far, only sees the “intentions of major shareholders”.
    Even if users beg for mercy, they act like it’s not even there.

    It’s been a long time since “GAFMA” was mentioned as a platformer that monopolizes the market in the field of digital technology. It means “Google, Apple, Facebook (Meta), Microsoft, Amazon”, so All of them started with a pure and innocent pioneering spirit.
    Google LLC was a research project by Lawrence Edward Page and Sergey Mikhaylovich Brin, Ph.D. was made public (Incorporated as a privately held company on September 27, 1998, the company first went public on August 19, 2004).
    Apple Inc. was founded on April 1, 1976 by Steven Paul Jobs, Stephen Gary Wozniak, and Ronald Wayne (Incorporated as a privately held company on September 27, 1998 and first went public on August 19, 2004).
    Facebook was founded in 2004 by Mark Zuckerberg and Eduardo Saverin, Zuckerberg’s Harvard roommate and classmate (Initially, membership was limited to students with Harvard domain email addresses.).
    Microsoft was founded in 1975 by Bill Gates and Paul Allen.
    Amazon was founded by founder Jeffrey Preston Bezos in July 1995, and started its service as an online bookstore.

    As services are commercialized and the market becomes globalized, “capital power” is required, and in a capitalist society, “establishing a stock company” is advantageous. Although the company went public and collected capital, its capital strength was dramatically strengthened, but in exchange for this, “shareholders will seize control of management”, and business services will change in nature.
    In short, only the interests of shareholders (stock prices, dividends) are pursued, and the viewpoint of customers (users) is no longer considered. This is the fate of the capitalist economy.
    If the company becomes a company that attracts attention from the stock market, it will never no longer be looked back on as a thing of the past by its founder’s ambitions and philosophies. Because only the shareholder’s money making (golden eggs) becomes the purpose and begins to run wild, even if they step on the accelerator, they don’t step on the brake, and it becomes difficult to correct the trajectory.
    At best, it won’t slow down unless it’s punished by the judiciary or the customer (user) does a massive boycott.

    However, Google users, like nicotine addiction, alcohol addiction, substance dependence, etc., are dependent on the services Google offers, and far from dissent, they are submissive to Google.
    Google will never go back to being a moralist.

  3. John G. said on June 14, 2023 at 1:57 am

    Microsoft should be the next then.

  4. X said on June 13, 2023 at 8:55 pm

    Google paid billions in fines in the past already…

    Indeed, Google (and others) had been slapped with record fines in the past. Each instance was widely advertised, like here on this blog.

    But how much dough did they cough up as of now? I’d like to see some proof.

  5. Cor Invictus said on June 13, 2023 at 4:49 pm

    “For users, it could lead to more user-friendly technologies being implemented in Chromium”
    Which will be called pipe dreams tech. ;)

  6. just an Ed said on June 13, 2023 at 2:23 pm

    ” like the moving from individual user tracking to group-based tracking…” A distinction without a difference when you consider people’s behavior tends to fall into distinct groupings. Individuals will fall into multiple groups, but it is the group behavior that is actually targeted in an ad. Beer drinkers vs. whiskey, or those in need of a new appliance; we all fall into multiple groups and that is what advertisers are interested in.

  7. Anonymous said on June 13, 2023 at 2:12 pm

    About time

  8. Carrot Probe said on June 13, 2023 at 12:58 pm

    Article: “[…] Google captured 28.8% […] Meta 19.6& …” Martin, you probably meant to write per cent, rather than the ampersand symbol, e.g. (28.8% for Google and 19.6[%] for Meta, equating to 48.4%).

  9. ECJ said on June 13, 2023 at 12:52 pm

    Targeted advertising should be outright illegal. It should not be legal for organisations to track people and build databases and profiles on them. Advertising should be contextual only.

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