EU regulators have stated that Alphabet’s Google might be required to sell a portion of its adtech business to address concerns regarding anti-competitive practices, Reuters news report said.
This announcement represents the most severe regulatory penalty faced by Google to date, the report said.
The European Commission, after a two-year investigation into behaviors such as favoring its own advertising services, has outlined the charges in a statement of objections.
If found guilty, Google could face a fine of up to 10 percent of its annual global turnover. This particular clash holds greater significance for Google since the adtech business accounted for 79 percent of its total revenue last year, making it the company’s primary source of income.
In 2022, Google generated $224.5 billion in advertising revenue, which included income from various services such as search, Gmail, Google Play, Google Maps, YouTube ads, Google Ad Manager, AdMob, and AdSense.
Margrethe Vestager, the EU antitrust chief, highlighted that a behavioral remedy would likely be ineffective in curbing the anti-competitive practices and suggested that Google may need to divest a portion of its adtech business, such as its sell-side tools DFP and AdX, to eliminate conflicts of interest.
Margrethe Vestager acknowledged the strength of this statement but emphasized that it reflected the nature and functioning of the markets, making a behavioral commitment unviable. Google responded by stating its disagreement with the Commission’s charge, asserting that the investigation focuses on a limited aspect of its advertising business and is not a new development.
Margrethe Vestager further revealed that investigations would persist regarding Google’s introduction of privacy sandbox tools designed to block third-party cookies on its Chrome browser, as well as its plan to restrict access to the advertising identifier for third parties on Android smartphones. The EU has collaborated closely with competition authorities in the United States and the UK throughout these proceedings.
The European Publishers Council, which previously filed a complaint with the Commission, expressed support for the charges brought against Google. The Commission asserted that Google has favored its own online display advertising technology services at the expense of competing providers, advertisers, and online publishers.
Google has allegedly abused its dominant position since 2014 by favoring its ad exchange AdX during ad selection auctions conducted by its dominant publisher ad server DFP. Google is also accused of showing preferential treatment to AdX in the bidding process conducted by its ad buying tools Google Ads and DV360 on ad exchanges.
According to research firm Insider Intelligence, Google currently holds a 28 percent market share of global ad revenue, solidifying its position as the leading digital advertising platform worldwide. It is worth noting that Google attempted to settle the case three months after the investigation commenced, but regulators grew dissatisfied with the slow progress and the lack of substantial concessions.
