May 21, 2024

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Google is facing the disintegration of the European Union due to its anti-competitive ad technology practices

Google is facing the disintegration of the European Union due to its anti-competitive ad technology practices

BRUSSELS (Reuters) – European Union regulators said on Wednesday that Alphabet (GOOGL.O) Google may have to sell part of its lucrative ad technology business to address concerns about anti-competitive practices, threatening the company with its harshest regulatory penalty yet. .

The European Commission outlined its charges in a statement of objections to Google two years after opening an investigation into behavior such as favoring its own advertising services, which could also result in a fine of up to 10% of Google’s annual global turnover.

The stakes are high for Google in this latest clash with regulators over the company’s biggest money maker, whose advertising business accounted for 79% of total revenue last year.

Advertising revenue for 2022, including search services, Gmail, Google Play, Google Maps, YouTube ads, Google Ad Manager, AdMob and AdSense, was $224.5 billion.

Google has a few months to respond to the fee. It could also request a closed hearing before the commission’s top antitrust officials and their national counterparts before the EU issues a decision, a process that could take a year or more. The company could also stabilize itself by offering stronger treatments than previously suggested.

EU antitrust chief Margrethe Vestager said Google may have to sell part of its ad technology business because behavioral therapy is unlikely to be effective in stopping anti-competitive practices.

“For example, Google can get rid of its sell-side tools, DFP and AdX. By doing so, we will put an end to conflicts of interest,” she said at a press conference.

“Of course I know this is a strong statement but it is a reflection of the nature of the markets, how they work and also why behavioral compliance seems out of the question.”

Google said it did not agree with the Commission’s accusation.

“The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the European Commission’s view,” Dan Taylor, Google’s vice president of global advertising, said in a statement.

Vestager said investigations will continue into Google’s submission of a privacy protection toolkit to block third-party cookies on its Chrome browser and its plan to stop making advertising identifier available to third parties on Android smartphones.

She said the EU cooperated closely with competition authorities in the United States and the United Kingdom.

The European Publishers Council, which lodged a complaint with the Commission last year, welcomed the accusation.

The commission said Google favored ad technology services on its own display network at the expense of competing ad technology providers, online advertisers and publishers.

It said that Google had abused its dominance since 2014 by favoring AdX ad exchanges in the ad selection auction by the dominant publisher ad server DFP, and also by favoring AdX in the way ad buying tools Google Ads and DV360 bid on ad exchanges.

Google is the world’s dominant digital advertising platform with a market share of 28% of global ad revenue, according to research firm Insider Intelligence.

A person familiar with the matter told Reuters earlier that Google had sought to settle the case three months after the investigation was opened, but regulators were frustrated by the slow pace and the lack of major concessions.

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(Reporting by Fu Yun Che, additional reporting by Sudeep Kar Gupta); Editing by Philip Blenkinsop, Kirsten Donovan and Lisa Shumaker

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