The European Commission, the antitrust regulator of the European Union, has delivered a blow to Google’s advertising business by requiring the tech giant to divest some of its ad business due to concerns over competition. European Commission Vice President Margrethe Vestager highlighted Google’s dominant position in the online advertising technology sector, where it collects user data, sells ad space, and acts as an intermediary. The commission’s preliminary investigation suggests that Google may have used its market position to favor its own intermediation services, potentially harming competitors and publishers while increasing costs for advertisers. If confirmed, these practices would be deemed illegal under EU competition rules.
Vestager pointed out the inherent conflicts of interest that arise from Google’s dual role as a representative of both buyers and sellers, as well as the company’s ability to set the rules for how demand and supply meet in the adtech industry. The European Commission’s decision stems from a formal investigation launched in June 2021, examining whether Google violated competition rules by prioritizing its own online display advertising technology services over rival publishers, advertisers, and adtech services. The investigation also explored whether Google leveraged the dominant position of YouTube to favor its ad-buying services by imposing restrictions on competitors.
The commission’s preliminary findings indicate that since at least 2014, Google abused its dominant positions by favoring its ad exchange, AdX, in ad selection auctions and by directing its ad buying tools, such as Google Ads and DV360, to mainly place bids on AdX rather than competing ad exchanges. The Commission expressed concern that these actions may have given AdX a competitive advantage, potentially excluding rival ad exchanges and solidifying Google’s central role in the adtech supply chain, allowing the company to charge high fees for its services.
