Google: Here’s why European Commission wants Google to break its ad business – Times of India

European Union antitrust regulator European Commission has dealt a blow to Google’s advertising business. In an unprecedented decision, it said that Google must sell off some of its ad business to address competition concerns. European Commission Vice President Margrethe Vestager said that Google has a very strong market position in the online advertising technology sector. It collects users’ data, it sells advertising space, and it acts as an online advertising intermediary. So Google is present at almost all levels of the so-called adtech supply chain. Our preliminary concern is that Google may have used its market position to favour its own intermediation services. Not only did this possibly harm Google’s competitors but also publishers’ interests, while also increasing advertisers’ costs. If confirmed, Google’s practices would be illegal under our competition rules.
“Google is representing the interests of both buyers and sellers. And at the same time, Google is setting the rules on how demand and supply should meet,” she said at a news conference.” “This gives rise to inherent and pervasive conflicts of interest,” she added.
The commission’s decision comes from a formal investigation that it opened in June 2021, looking into whether Google violated the EU’s competition rules by favoring its own online display advertising technology services at the expense of rival publishers, advertisers and advertising technology services. YouTube was one focus of the commission’s investigation, which looked into whether Google was using the video sharing site’s dominant position to favour its own ad-buying services by imposing restrictions on rivals.
Commission preliminarily findings said that since at least 2014, Google abused its dominant positions by:
* Favouring its own ad exchange AdX in the ad selection auction run by its dominant publisher ad server DFP by, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.
* Favouring its ad exchange AdX in the way its ad buying tools Google Ads and DV360 place bids on ad exchanges. For example, Google Ads was avoiding competing ad exchanges and mainly placing bids on AdX, thus making it the most attractive ad exchange.
The Commission added that it is concerned that Google’s allegedly intentional conducts aimed at giving AdX a competitive advantage and may have foreclosed rival ad exchanges. This would have reinforced the company’s AdX central role in the adtech supply chain and Google’s ability to charge a high fee for its service.
Some silver lining
The European Commission, however, said that its preliminary view after an investigation is that “only the mandatory divestment by Google of part of its services” would satisfy the concerns. This reportedly is for the first time that the EU bloc has told a tech giant to split up key parts of its business over violations of antitrust laws.
What options Google has
Google can now defend itself by making its case before the commission issues its final decision. The company said that it disagreed with the finding and “will respond accordingly.” It said that the EU’s investigation focused on a narrow part of its ad business.
“Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers,” said Dan Taylor, Google vice president of global ads. “Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector.”
(With agency inputs)