The European Union has been busy in the world of tech, and not just on AI.
Last month, the European Data Protection Board slapped Meta with a $1.3 billion fine over alleged violations of the region’s data privacy laws. On Wednesday, EU antitrust regulators accused Google of anticompetitive ad-tech practices and suggested that selling off part of its business was the only way to “address its competition concerns.”
The recommendation comes as part of the European Commission’s preliminary findings in an investigation that dates back to 2021 into whether Google violated EU rules by allegedly “favoring its own online display advertising services to the detriment of competing providers.”
“We are concerned that Google may have illegally distorted competition in the online advertising technology industry, also known as ‘ad tech,’” European Commission Executive Vice President Margrethe Vestager said in remarks published Wednesday.
In the ad-tech ecosystem, which Vestager described as “matching supply and demand for advertising space online,” Google offers services for both advertisers and publishers (websites with ad space). Google also operates a real-time ad marketplace known as an ad exchange.
Dominance in and of itself isn’t an issue, Vestager added. But the commission’s findings indicate that Google “may have abused its dominant position” by allegedly favoring its own ad exchange over rivals in several ways:
Vestager offered an example: DoubleClick for Publishers, Google’s sell-side tool, selects ads via auction. Instead of running a “sealed” auction, in which no bidder knows the value of rival bids, the commission alleged Google gave its own ad exchange, AdX, a leg up by letting it “open the sealed envelopes of all other rivals before placing its own bid.”
Vestager also pointed to Google Ads, which places bids on behalf of advertisers, and which the EU alleges placed bids “only, or almost only” on AdX.
The commission claimed the behavior dates back to at least 2014.
Google pushed back on the allegations.
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“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,” Google Vice President for Global Ads Dan Taylor said in a statement.
“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,” he added.
Zoom out: This isn’t the first time the European Commission has investigated Google: In June 2017, it fined Google $2.8 billion for alleged antitrust violations related to its search business (Google has appealed twice). It also isn’t the only regulatory body with concerns.
Back in January, the US Department of Justice and a handful of state attorneys general sued Google, for allegedly “monopolizing digital advertising technologies” through “serial acquisitions and anticompetitive auction manipulation.” That case was fast-tracked by a federal judge in Virginia.
Then, in May, the British Competition and Markets Authority announced its own investigation into Google’s ad-tech practices.
Meanwhile, a separate DOJ suit, filed against Google in 2020 over its search and search advertising business, is scheduled to go to trial in September.
What’s next? In a press release, the European Commission noted that the Statement of Objections it sent to Google on Wednesday is a “formal step” in the group’s investigation. Google will now have the opportunity to examine the commission’s investigation, provide a written response, and request a hearing to present comments on the case.
Depending on the findings of the investigation, the EC can impose a fine of up to 10% of Google’s annual global income (that figure neared $300 billion in 2022) and could require Google make a “structural remedy” in the form of divesting a portion of its ad-tech stack.