The European Union (EU) has once again turned its attention to Google’s stronghold on the online advertising market, expressing concerns that the company’s practices violate EU antitrust laws and suggesting that a breakup of its ad business may be necessary.
In an announcement today, the EU notified Google of its “preliminary view” regarding alleged breaches of antitrust regulations in its ad tech operations. Central to these concerns is Google’s apparent bias towards favoring its own ads within its products, while simultaneously discouraging competition.
The EU points to Google’s management of its AdX ad exchange as evidence of these practices. On the publisher side, ad selection is conducted through AdX via DFP (DoubleClick for Publishers), while buying tools for advertisers, such as Google Ads and DV360 (Display & Video 360), also operate through AdX. This arrangement effectively excludes third-party ad exchanges from the equation.
The EU emphasizes that a mere “behavioral remedy” would not suffice in this case and asserts that Google should be compelled to divest its ad business, thereby separating it from the core operations of Google itself.
According to the Commission’s preliminary findings, a behavioral remedy is unlikely to effectively prevent Google from continuing its self-preferencing behaviors or engaging in new ones. The fact that Google is involved on both sides of the market, as both a publisher ad server and an ad buying tools provider, while simultaneously holding a dominant position in both realms, exacerbates inherent conflicts of interest. Furthermore, Google operates the largest ad exchange, further exacerbating the issue. The Commission therefore contends that mandatory divestment by Google of a portion of its services is necessary to address these competition concerns.
It is important to note that this preliminary view does not guarantee the outcome of a future ruling against Google, but it sets the tone for potential actions to be taken.
If Google were indeed required to spin off its ad business, the consequences would be significant. The company heavily relies on its ad businesses, which contribute to nearly 80% of its revenue, as highlighted by Reuters. Google’s ads pervade many of its core products, including Gmail, Maps, and YouTube, among others.