EU Regulators Closer to Demand Google Selling Ad-Tech Business

EU regulators are reportedly considering an order that would require Alphabet Inc’s Google to sell a portion of its advertising-technology business, as concerns over the tech giant’s dominance in digital ads persist. 

The European Commission, the EU’s primary antitrust authority, is expected to issue a statement of objections against Google in the coming days, according to a source with direct knowledge of the matter.

Growing Competition Concerns

The European Commission initiated an investigation in 2022 into Google’s extensive presence throughout the supply chain for online display advertising, expressing concerns about its overwhelming market position. Frustration has been mounting as Google has failed to address the competition concerns raised by regulators. Break-up orders from the EU competition enforcer are rare, underscoring the significance of the potential action against the tech giant.

“Should the Commission conclude that Google acted in an illegal manner,” Commissioner Vestager said, it might order the company to “divest a part of [its] services,” such as its DoubleClick For Publishers or AdX services, and “by doing so, we will put an end to the conflict of interest.”

Allegations of Anti-Competitive Practices

Google’s dominance in the realm of online advertising has faced increased scrutiny in recent years. Rivals have lodged complaints accusing the company of engaging in anticompetitive practices, prompting antitrust investigations in various jurisdictions worldwide. Earlier this year, the United States initiated a legal action against Google, demanding the divestment of its ad manager suite. The lawsuit alleged that the search giant had unlawfully abused its dominant position in online advertising. Google has consistently denied any wrongdoing.

Google “may have abused its dominant position by favoring its own ad tech business,” antitrust Commissioner Margrethe Vestager said at a press conference on Wednesday.

Market Impact and Financial Performance

As the most dominant digital advertising platform globally, Google currently holds a 28% market share of global ad revenue, according to research firm Insider Intelligence. Although Alphabet’s first-quarter ad sales slipped compared to the previous year, generating $54.55 billion, the results exceeded analysts’ expectations. The parent company’s total revenue during the same period reached $69.79 billion, demonstrating the continued financial strength of Google’s advertising business.

EU’s Pursuit of Diminishing Dominance

The potential action by the European Union aligns with trans-Atlantic efforts to curtail Google’s overpowering presence in the digital advertising landscape. By demanding divestment, the EU aims to foster a more competitive market environment that offers opportunities for smaller players and protects the interests of consumers. The forthcoming formal complaint against Google underscores the determination of European regulators to address the perceived anticompetitive practices and dominance of the tech giant.