On Wednesday, the European Commission accused Google of abusing its dominant position in the market for online advertisements and urged that the American giant sell a portion of its ad services in order to ensure that there is fair competition.
The EU executive has extended an invitation to Google to provide a response to this preliminary finding, which was issued following a two-year investigation into anti-trust violations before a final decision was made.
If the commission continues to hold this position after that, it has the authority to impose a fine on Google equal to up to ten percent of the company’s total yearly revenues from all over the world.
Google immediately published a statement in which its vice president for global advertisements, Dan Taylor, said that the company “disagrees” with the announcement made by the commission and that “we will respond accordingly.”
He emphasized Google’s determination to “create value” for advertisers in a field that was described as “highly competitive” and stated that “the commission’s investigation focuses on a narrow aspect of our advertising business.”
Alphabet, the United States-based technology behemoth, is the parent company of Google, which in the most recent quarter of 2022 had worldwide revenues of $76 billion.
The EU’s anti-trust actions are led by Commission Vice President Margrethe Vestager, who stated, “We are concerned that Google may have illegally distorted competition in the online advertising industry, also known as adtech.”
She stated that the commission had not yet come to a decision regarding the matter and was waiting for a response from Google at the time.
“It is quite rare that we ask for a divestiture, and we have not asked for it yet,” Vestager added. “We have not asked for it yet.”
– ‘Dominant’ in ad market –
The preliminary opinion of the commission, however, was that divestment was the only suitable solution, given that Google is “dominant in both the buy-side and the sell-side” of the market for internet advertisements.
In particular, the committee made notice of the fact that Google not only offers digital tools for the placement of online advertisements in the form of webpage banners, video, music, photos, and text, but that it also acts as an intermediary for advertisers and publishers to get advertisements displayed on computer and mobile screens.
In order to accomplish this, it possesses an ad exchange known as AdX that brings together buyers and sellers, as well as an ad server known as DoubleClick and tools for purchasing advertisements known as Google Ads and DV 360.
The European Commission issued a statement in which it stated it “preliminarily finds that, since at least 2014, Google abused its dominant positions” by favoring AdX in ad buys made via DoubleClick, Google Ads, and DV 360. The statement was released after the European Commission made its preliminary findings.
According to the report, this may have been “intentional conducts aimed at giving AdX a competitive advantage,” which allowed Google to charge higher fees in its ad tech supply chain while simultaneously pushing competing ad exchanges out of the market.
The preliminary finding that was published by the commission on Wednesday follows closely in the footsteps of an anti-trust suit that the United States government filed against Google in January.