EU could breakup Google’s ad business over antitrust violations

'Google may have abused its dominant position by favoring its own adtech services,' the EU commission wrote.

Arnd Wiegmann / Reuters

Europe has accused Google of "abusive practices in online advertising technology" that could lead to its ad business being split up, the EU Commission wrote in a statement of objections. It found preliminarily that since Google is unlikely to change its behavior, only the "mandatory divestment" of part of its services would address competition concerns.

"Google is present at almost all levels of the so-called adtech supply chain," executive VP Margrethe Vestager said in a statement. "Our preliminary concern is that Google may have used its market position to favor its own intermediation services. Not only did this possibly harm Google’s competitors but also publishers’ interests, while also increasing advertisers’ costs."

Google's ad business is now under attack on several fronts. Earlier this year, the US Department of Justice (DoJ) sued Google to break up its ad business, accusing it of illegally monopolizing the market. That in turn forced key ad tech rivals to abandon the market, dissuade new ones from joining and left the few remaining competitors "marginalized and unfairly disadvantaged," the regulator said.

There is nothing wrong with being dominant as such. What our investigation has shown though, is that Google appears to have abused its market position. It did so by ensuring that both its intermediation tools on the buy- side and on the sell-side would favour AdX in the “matching” auctions.

The EU Commission said Google is dominant in virtually all parts of adtech via services for both advertisers and publishers, along with an ad exchange called AdX. That would be fine by itself, but it accused Google of abusing its market position by making sure both its buy- and sell-side intermediation tools would favor its own exchange. "In other words, we are concerned about two potentially anticompetitive conducts by Google, which are both about favoring AdX," the Commission wrote.

In one case, AdX was able to bid after all other bidders had done so, and in another, it was informed in advance of the value of the best bids from rivals. On the supply side, Google Ads placed bids nearly exclusively on its own exchange, giving it a significant advantage over competitor's exchanges, according to the EU.

The Commission said that any remedy demanding Google change its behavior would be ineffective. "The Commission's preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns," according to the statement of objections.

Google will now be able to respond to the complaint before any judgement is issued. On top of being split up, the company could face a fine of up to 10 percent of its yearly global turnover, pending any appeal. It's unusual for the EU to suggest any remedy ahead of a guilty judgement, The Wall Street Journal noted. Engadget has reached out for a statement from Google.

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