Home News Potential Dismantlement of Google’s Ad Division Looms Over Alleged Antitrust Breaches

Potential Dismantlement of Google’s Ad Division Looms Over Alleged Antitrust Breaches

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Google antitrust violations

The European Union (EU) Commission has leveled allegations against Google, citing “abusive practices in the realm of online advertising technology.” The potential result? A dismantling of Google’s advertising operations. The Commission’s preliminary findings suggest that Google is unlikely to alter its conduct, thus leading to the conclusion that only a “forced divestiture” of a portion of its services would assuage competition concerns.

“Google’s influence spans virtually every tier of the so-called adtech supply chain,” remarked Executive VP Margrethe Vestager. “We’re preliminarily concerned that Google might have leveraged its market dominance to preferentially treat its own intermediation services. This could not only have detrimental effects on Google’s competitors but also potentially harm the interests of publishers, while escalating costs for advertisers.”

Google’s ad operations are currently under scrutiny from multiple directions. Earlier in the year, the US Department of Justice (DoJ) initiated a lawsuit against Google, aiming to dismantle its ad business, citing allegations of illegal monopolization of the market. This triggered key ad tech competitors to vacate the market, discouraged new entrants, and resulted in the few remaining competitors being “marginalized and unjustly disadvantaged,” according to the regulatory body.

While there is no inherent issue with market dominance, the investigation reveals that Google seems to have exploited its position. It purportedly did so by ensuring its intermediation tools favored AdX in the “matching” auctions, whether from the buying or selling perspective.

The EU Commission suggests that Google holds dominance in almost all aspects of adtech, providing services to advertisers and publishers, along with an ad exchange dubbed AdX. While this in itself is not problematic, the Commission alleges that Google misused its market dominance by ensuring both its buying and selling intermediation tools favored its own exchange. “In essence, we have concerns about two potential anticompetitive behaviors by Google, both related to favoritism towards AdX,” wrote the Commission.

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On one occasion, AdX was given the chance to bid after all other competitors had done so. On another, it was prematurely informed of the highest rival bids. From a supply perspective, Google Ads almost exclusively placed bids on its own exchange, providing it with a notable edge over competitor exchanges, as stated by the EU.

According to the Commission, any solution requiring Google to modify its conduct would prove ineffectual. “In its preliminary stance, the Commission believes that only a compulsory divestiture of some Google’s services would address its competition worries,” per the statement of objections.

Google now has the opportunity to respond to these allegations before a decision is rendered. In addition to a potential division, Google could face a penalty amounting to as much as 10 percent of its annual global revenue, depending on any appeal. It’s noteworthy that the EU rarely suggests any remedial measures before a guilty verdict, as pointed out by The Wall Street Journal. BuyTechBlog is awaiting a statement from Google.

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Frequently Asked Questions (FAQs) about Google antitrust violations

Q: What are the allegations against Google by the EU Commission?

A: The EU Commission has accused Google of engaging in “abusive practices in online advertising technology” and misusing its market position to favor its own intermediation services, potentially harming competitors, publishers, and increasing advertisers’ costs.

Q: What could be the consequences for Google’s ad business?

A: The EU Commission suggests that the potential consequences for Google’s ad business could include a breakup of its operations and the imposition of fines. The Commission believes that only the mandatory divestment of a portion of Google’s services would address the competition concerns raised.

Q: What actions have other regulatory bodies taken against Google’s ad business?

A: Earlier, the US Department of Justice (DoJ) filed a lawsuit against Google, seeking to break up its ad business and accusing it of illegal monopolization of the market. This lawsuit prompted competitors to exit the market, dissuading new entrants and leaving remaining competitors at a disadvantage.

Q: How does Google allegedly favor its own ad exchange, AdX?

A: The EU Commission alleges that Google favored its own exchange, AdX, by ensuring that both its buy-side and sell-side intermediation tools would give preferential treatment to AdX. This advantage was achieved by allowing AdX to bid after other competitors and by providing advanced knowledge of the highest rival bids.

Q: What penalties could Google face if found guilty?

A: If found guilty, Google could potentially face fines of up to 10 percent of its yearly global turnover. The actual penalties would depend on any appeals made. In addition to fines, there is the possibility of a breakup of its ad business, as suggested by the EU Commission.

More about Google antitrust violations

  • EU Commission Statement of Objections: Link
  • US Department of Justice Lawsuit against Google: Link
  • The Wall Street Journal Article: Link

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