EU takes on Google: Calls for separation of Ad business
EU continues to give tough times to the technology leaders with its strict and user-friendly policies. The EU Commission is suing Google once more, and this time it's over the company's advertising operations. Once more, European regulators have discovered evidence of fraud in the advertising industry.
Due to its extensive involvement in virtually every stage of the so-called ad tech supply chain, Google is making use of its monopoly position to promote its own intermediation services. It's interesting to note that the US Department of Justice is also suing Google for its advertising business and wants to break it up because it has an unjustified monopoly.
"The Commission is concerned that Google’s allegedly intentional conducts aimed at giving [Google’s ad exchange] AdX a competitive advantage and may have foreclosed rival ad exchanges. This would have reinforced Google’s AdX central role in the adtech supply chain and Google’s ability to charge a high fee for its service," said the European Commission.
Although it is a significant milestone in the EU's probe, the statement of concerns released today does not predict how it will turn out. The Commission will now assess whether Google broke antitrust laws in the region after Google has had a chance to respond in writing and request a hearing. The EU's antitrust watchdog has the power to punish Google for up to 10% of its worldwide sales and impose different business reforms if it is found guilty.
We take issue with Google favouring its own online display advertising technology services to the detriment of competing providers of advertising technology services, advertisers and online publishers.
Our preliminary view is that Google may have breached EU antitrust rules by… pic.twitter.com/rhuTC4fU80
— European Commission (@EU_Commission) June 14, 2023
Google made an official announcement
Google's vice president of worldwide advertising, Dan Taylor, issued a statement in which he expressed the company's disagreement with the Commission's stance and referred to the digital advertising market as a "highly competitive sector."
“Our advertising technology tools help websites and apps fund their content and enable businesses of all sizes to effectively reach new customers. The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view, and we will respond accordingly," said Taylor.
If the ruling is granted, it may severely hurt Google's primary revenue stream. Despite offering everything from email to thermostats, the Alphabet-owned corporation still makes the majority of its money from advertising. In its earlier story on today's complaint, Bloomberg said that Google's advertising division is expected to generate around $225 billion in income for the corporation in 2022, or about 80% of total yearly revenue.Advertisement