The European Union’s executive branch, the European Commission, has stated that Google must sell off some of its ad business to address competition concerns. This is the first time a tech giant has been told it must split up key parts of its business over violations of the EU’s strict antitrust laws. The decision stems from an investigation into whether Google violated the bloc’s competition rules by favoring its own online display advertising technology services at the expense of rival publishers, advertisers, and advertising technology services. Google can defend itself before the commission issues its final decision.
Citing NBC News, the European Union (EU) has taken a bold step in its crackdown on Big Tech companies. In an unprecedented decision, EU antitrust regulators have directed Google to sell off some of its ad business to address competition concerns.
The EU’s executive branch, the European Commission, has led the global movement to regulate Big Tech companies. The bloc has previously issued hefty fines to companies like Google, including three antitrust penalties worth billions of euros (dollars). However, this is the first time the EU has ordered a tech giant to split up key parts of its business over violations of the bloc’s strict antitrust laws.
The commission’s decision stems from a formal investigation that it opened in June 2021. The investigation looked into whether Google violated the bloc’s competition rules by favoring its own online display advertising technology services at the expense of rival publishers, advertisers, and advertising technology services.
Google is dominant on both sides of the ad-selling market, Citing European Commission Vice President Margrethe Vestager. The company abused that position by favoring its own ad exchange, reinforcing its ability to charge a high fee for its services, the commission said.
The EU’s preliminary view is that “only the mandatory divestment by Google of part of its services” would satisfy the concerns. While details on what that would look like have not been released, Google can now defend itself by making its case before the commission issues its final decision.
The company said it disagreed with the finding and “will respond accordingly,” with the EU’s investigation focusing 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.”
One focus of the commission’s investigation was YouTube, which looked into whether Google gave the video-sharing platform preferential treatment in its ad services. Vestager said that Google is representing the interests of both buyers and sellers, while also setting the rules on how demand and supply should meet. “This gives rise to inherent and pervasive conflicts of interest,” she said at a news conference.
The EU’s decision is a significant blow to Google, which earns billions of dollars from its digital advertising business. The company has faced increasing scrutiny from regulators worldwide, with antitrust lawsuits filed against it in the United States and India. Google is not the only tech giant facing antitrust scrutiny in the EU, with Amazon and Apple also under investigation.
The EU’s move is likely to have far-reaching implications for the tech industry, particularly in terms of how companies operate in the digital advertising space. It remains to be seen how Google will respond and what the final decision of the commission will be. However, the EU’s decision sends a clear message that it will not tolerate anticompetitive behavior from Big Tech companies.