EU says Google abused dominant positions in online ads

The European Commission accused Google on Wednesday of abusing its dominance of the online ad market and recommended the US company sell part of its ad services to ensure fair competition.

The EU executive invited Google to now respond to this preliminary finding, made after a two-year antitrust probe, before a definitive finding was made.

If the commission maintains its view after that, it could levy a fine of up to 10 percent of Google’s annual global revenues.

The charges add pressure on Google over its dominance of the ad tech industry as it comes just months after US authorities sued the company for the same issue.

Google’s vice president for global ads, Dan Taylor, said in a statement that the company disagrees with the commission’s announcement and “will respond accordingly”.

He stressed Google was committed to “creating value” for advertisers in a “highly competitive” market and said “the commission’s investigation focuses on a narrow aspect of our advertising business”.

Google is a subsidiary of US tech giant Alphabet, which reported worldwide revenues of $76 billion in the last three months of 2022. Google’s advertising income forms the core part of that.

Commission Vice President Margrethe Vestager, who spearheads the EU’s antitrust activities, said: “We are concerned that Google may have illegally distorted competition in the online advertising industry, also known as adtech.”
She said the commission had not yet made a final conclusion in the case, and was awaiting Google’s response.

“It is quite rare that we ask for a divestiture, and we have not asked for it yet,” Vestager said.

– ‘Dominant’ in ad market –

The commission’s preliminary view, though, was that divestiture was the only appropriate remedy, given that Google is “dominant in the buy-side, dominant in the sell-side” of the online ad market.

“It’s a reflection of how pervasive Google is in this value chain that we think that a divestiture is the only way to solve this,” Vestager said.

Specifically, the commission noted that Google not only provides digital tools to place online ads in the form of webpage banners, video, audio, images and text, but also acts as an intermediary for advertisers and publishers to get ads on computer and mobile screens.

For that, it has an ad exchange to match buyers and sellers, called AdX, as well as an ad server called DoubleClick, and tools to buy ads called Google Ads and DV 360.

In a statement, the European Commission said it “preliminarily finds that, since at least 2014, Google abused its dominant positions” by favouring AdX in ad buys via DoubleClick, Google Ads and DV 360.

That, it said, may have been “intentional conducts aimed at giving AdX a competitive advantage” that sidelined rival ad exchanges and allowed Google to charge higher fees in its adtech supply chain.

– US suit –

The commission’s preliminary finding announced on Wednesday tracks closely with an antitrust suit lodged against Google by the US government in January.

In that case, the US Department of Justice (DOJ) accused Google of running an unlawful monopoly that “corrupted legitimate competition in the ad tech industry”.

Vestager said “our cooperation with the DOJ has been close” and Brussels and Washington “share the same view as to what is good for competition and ultimately also how to best remedy the issues” when it comes to Google.

The European Consumer Organisation said it welcomed the commission’s initial stance that Google needs to divest part of its adtech business.

“We are glad that the commission is willing to use its competitive enforcement toolbox to its full extent to stop dominant companies like Google abusing their market power,” its head, Monique Goyens, said.

Brussels has already slapped over eight billion euros in fines on Google in different cases for abusing its dominant market position.