EU threatens billions in fines for abuse of power over Google’s advertising tools
In a preliminary ruling, the European Commission accuses Google of abuse of power regarding its advertising services. The company has been said to prefer its own services since 2014. The EC may want Google to ‘dispose’ of some of its sales tools.
According to the European Commission the biggest concern is that Google “may have used its market position to favor its own mediation services.” Such services mediate between advertisers and parties that display those advertisements on their websites. Because Google favors its own mediators, those of other parties are more or less sidelined, according to the EC. That would not only have hurt the tech giant’s competitors, but also increased costs for advertisers, as it allows Google to charge a high rate for its service.
This would mainly concern Google’s ad exchange platform AdX, which would receive preferential treatment as much on the selling and buying side by the advertising services DV 360 and Google Ads. This way, AdX could still bid after all other parties had already bid and the platform also knew in advance the value of the highest bids.
On the sales side, Google Ads would have bid almost exclusively on its own AdX platform, which, according to the EC, gave it a major advantage over the competition. “Google represents the interests of both buyers and sellers. At the same time, Google sets the rules for how supply and demand should meet. This creates an inherent and profound conflict of interest.”
The EC says it has no confidence that Google will change its behavior. The Commission is afraid that if it requires Google to simply adapt its services, the company will simply continue to do what it is doing now. European Commissioner Margrethe Vestager stilt that Google probably only changes its behavior in a ‘subtle way’ to make it more difficult to detect. That is why the EC says that its objections can only decrease if Google divests some of its services in its entirety, such as Doubleclick for Publishers and AdX. Google also faces a fine of up to 10 percent of its annual global revenue if found guilty.
Google says in a response that it disagrees with the European Commission’s assessment, writes, among others, The Verge. “Our advertising technology helps websites and apps finance their content and help companies, large and small, effectively reach new customers. The European Commission’s investigation focuses on a small aspect of our advertising business and is not new.” Google says it will respond ‘appropriately’ to the allegations.
The EC already started the antitrust investigation in 2021. This is a provisional conclusion. Google will now first have the opportunity to respond to the European Commission’s concerns before the EC makes a final judgment and comes up with actual consequences.