EU asks Google to sell part of ad biz to address competition concerns

European Union antitrust regulators took aim at Google's lucrative digital advertising business in an unprecedented decision ordering the tech giant to sell off some of its ad business to address competition concerns.

The European Commission, the bloc's executive branch and top antitrust enforcer, said that its preliminary view after an investigation is that only the mandatory divestment by Google of part of its services would satisfy the concerns.

The 27-nation EU has led the global movement to crack down on Big Tech companies but it has previously relied on issuing blockbuster fines, including three antitrust penalties for Google worth billion of euros (dollars).

It's the first time the bloc has ordered a tech giant to split up keys of business.

Google can now defend itself by making its case before the commission issues its final decision. The company didn't immediately respond to a request for comment.

The commission's decision stems from a formal investigation that it opened in June 2021, looking into whether Google violated the bloc's competition rules by favouring its own online display advertising technology services at the expense of rival publishers, advertisers and advertising technology services.

YouTube was one focus of the commission's investigation, which looked into whether Google was using the video sharing site's dominant position to favour its own ad-buying services by imposing restrictions on rivals.

Google's ad tech business is also under investigation by Britain's antitrust watchdog and faces litigation in the US.

Brussels has previously hit Google with more than 8 billion euros (now USD 8.6 billion) worth of fines in three separate antitrust cases, involving its Android mobile operating system and shopping and search advertising services.

The company is appealing all three penalties. An EU court last year slightly reduced the Android penalty to 4.125 million euros. EU regulators have the power to impose penalties worth up to 10 per cent of a company's annual revenue.
 

 

In Perspective

• The EU case is a direct attack on the black-box of online advertising
• Online advertising is Alphabet’s most lucrative business, generating 80% of total revenue last year, adding up to about $225 billion
• The new charge sheet follows three earlier EU cases against Google, in which the firm has racked up over $8.6 billion since 2017 for abuses of dominance on its mobile OS, its search business, and display advertising operations
• While antitrust charge sheets can pave the way for fines as much as 
• 10% of a firms’ global sales, they seldom approach that level, meaning the impact on earnings of Silicon Valley firms is often muted