EU says Google should break up its ad business

Rumors turned out to be true, and the European Commission announced on Wednesday that it sent a statement of objections to Google suggesting it should break up its advertising business.

In a statement, the Commission announced its ‘’preliminary view’’ that Google violated the European Union antitrust rules by harming competition in the ad tech industry and favouring its own ad tech services.

The Commission said it preliminarily found that the tech giant abused its dominant position in the industry since at least 2014, 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.

It added that Google may be required to divest a part of its services to address its concerns since a ‘’behavioural remedy’’ is unlikely to be effective.

‘’The Commission preliminarily finds that, in this particular case, a behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones. Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends. Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google. The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns.’’

Following the news, Dan Taylor, Google’s Vice President of Global Ads, said: ‘’Today’s Statement of Objections from the European Commission sets out claims that are not new and relate to a narrow part of our advertising business. It fails to recognize how advanced advertising technology helps merchants reach customers and grow their businesses — while lowering costs and expanding choices for consumers.’’

‘’We look forward to showing how we have enabled higher-quality, more effective digital ads that have helped fund broader access to content and information online for everyone,’’ Taylor added.

Google generates 79% of its total revenue from its ad business, as reported Reuters. However, the company has long come under regulatory scrutiny in various countries for allegedly harming competition in the advertising industry.

In January, the company was sued by the U.S. Department of Justice and eight states for ‘’monopolizing multiple digital advertising technology products’’.