The European Union is focusing on tough remedies, including changes to the business model of companies, to prevent the most powerful firms from turning markets into competition dead-zones. Google’s ad tech practices have been under investigation by the EU since 2021, examining how the company may have obstructed rivals’ access to user data for online advertising and ringfenced data for its own use. The UK’s competition authority is also investigating Google’s ad tech practices. Litigation against the firm’s behavior is ongoing in the US as part of three different suits, which could result in an order for Google to separate its ad tech arm from its core business.
Quoting a recent article by Ad Age, Google’s dominance in the ad tech industry has sparked a threat of breakup from the European Union (EU). The EU has been investigating Google’s ad tech practices since 2021, examining whether the company has obstructed rivals’ access to user data for online advertising and ringfenced data for its own use.
While antitrust charge sheets can result in fines as high as 10% of a firm’s global sales, they seldom reach that level, resulting in a muted impact on earnings for Silicon Valley companies. Instead, regulators across Europe have shifted their focus towards demanding tough remedies, including changes to a company’s business model, that can be far more challenging.
Google has long held a dominant position in the ad tech industry, allowing it to collect data that enables advertisers to target ads, sell ad space, and provide technology that helps advertisers find publishers to sell their space. As a result, the EU is concerned that Google’s ad tech practices may be stifling competition in the market.
The UK’s competition authority has also been investigating Google’s ad tech practices, and litigation against the company’s behavior is ongoing in the US. Three separate suits have been filed by the US Department of Justice and a group of states, a separate one from a different group of states, and one by advertisers and publishers. These cases could lead to an order for Google to separate its ad tech arm from its core business.
The EU’s threat of a breakup is a significant escalation in the ongoing investigation into Google’s ad tech practices. If the EU were to impose such a remedy, it could have far-reaching consequences for Google’s business model and the broader ad tech industry.
In response to the investigation, Google has argued that it operates in a highly competitive market and that its ad tech practices benefit both advertisers and publishers. The company has also argued that it has been a significant driver of innovation in the industry, helping to create new opportunities for businesses of all sizes.
Despite Google’s arguments, the EU remains concerned that the company’s dominance in the ad tech industry may be stifling competition and harming consumers. In response, the EU is considering a range of remedies, including a possible breakup of the company.
To bring it all to a close, Google’s dominance in the ad tech industry has sparked a threat of breakup from the EU. While antitrust charges can result in fines, regulators across Europe have been pivoting towards demanding tough remedies that can be far more challenging for companies. Google’s ad tech practices are under investigation, and the threat of a breakup could have far-reaching consequences for the company and the broader ad tech industry. Only time will tell how this ongoing investigation will unfold and what the ultimate outcome will be.
