Google Faces Potential Breakup of Ad-tech Business by European Commission
The European Commission has formally charged Google with an antitrust complaint related to its advertising technology, known as ad-tech. The Commission’s preliminary conclusion is that Google has distorted competition in the ad-tech industry in Europe by favouring its own online display advertising technology services at the expense of competing providers. Google has allegedly been promoting its own ads since at least 2014, influencing how they are purchased and published on websites and mobile apps. According to Margrethe Vestager, the EU’s  executive vice-president in charge of competition policy, Google’s dominant position in the online advertising technology sector, where it collects user data, sells advertising space, and acts as an intermediary, has enabled it to harm competitors and increase costs for advertisers. Vestager,also explained that divestiture was being considered due to Google’s pervasive presence in the ad business. The European Commission has now given Alphabet, Google’s corporate parent, an opportunity to respond to the allegations and present its case. If Google is found guilty of violating EU antitrust laws, it could face fines of up to 10% of its annual worldwide turnover, which could amount to nearly $28 billion based on its 2022 revenue. The Commission has also suggested potential “structural remedies” to address the antitrust concerns, including restructuring Google’s adtech business to comply with competition rules in the EU. If the order for divestiture is issued, it could significantly impact Google’s primary revenue stream. While the company offers various services, advertising remains its major income generator, contributing around 80% of its annual revenue in 2022. This case marks the EU’s fourth major decision against Google, following fines totaling over €8 billion in previous antitrust cases. Google is challenging these earlier fines in court. Google’s vice president of global ads, Dan Taylor, has stated that the company disagrees with the Commission’s view, highlighting that the investigation focuses on a narrow aspect of their advertising business. Taylor emphasised the value that Google’s advertising technology tools provide to websites, apps, and businesses of all sizes. Big Techs Under Regulatory Stress This antitrust complaint adds to the regulatory challenges faced by Alphabet and Google. Not only is Google being investigated by the EU, but its advertising business is also under scrutiny outside of Europe. The UK’s Competition and Markets Authority (CMA) is examining Google’s practices for potential anticompetitive behaviour. In the US, the Justice Department and multiple states have filed lawsuits against Google for alleged anticompetitive practices in various segments of its business. Additionally, big-techs aren’t without trouble in India and Asia either. Top executives from Amazon, Google, Netflix, Microsoft, and other companies were summoned in August 2022 by a parliamentary panel in India to discuss anti-competitive practices. This followed a report that highlighted such practices by Google and Meta. Subsequently, in October 2022, the Competition Commission of India imposed two penalties on Google, amounting to a total of Rs 2,274 crore (approximately $310 million), for anti-competitive practices related to its Play Store billing policy. In the same month, Google was fined Rs 1,337.76 crore ($162 million) and Rs 936.44 crore ($113 million).
Google’s VP of global ads, Dan Taylor, said that the company disagrees with the Commission’s view, highlighting that the investigation focuses on a narrow aspect of their advertising business.
Google's VP of global ads, Dan Taylor, said that the company disagrees with the Commission's view, highlighting that the investigation focuses on a narrow aspect of their advertising business.
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Shyam is a tech journalist with expertise in policy and politics, and exhibits a fervent interest in scrutinising the convergence of AI and analytics in society. In his leisure time, he indulges in anime binges and mountain hikes.