EU Commission warning Google about abuse in ad tech business

Author Moonshot.news

Published on: 15/06/2023

The EU Commission has sent a warning to Google that could lead to the Commission ordering the company to sell part of its advertising tech sector. The Commission in a so-called statement of objection says a preliminary conclusion is that Google has abused its dominating position in the advertising tech.  If this is later confirmed by the Commission, it means saying Google should sell this part of its ad tech business. Google has been given time to answer to the accusation, says it disagrees and will respond accordingly.

Google’s VP Dan Taylor in a blog post says the Commission’s claims relate to a narrow part of the company’s 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. 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 stresses that ad tech is fiercely competitive and constantly evolving and that Google competes with hundreds of companies like Amazon, Microsoft, and Meta.

“We look forward to showing how our ad tech tools help make the internet open, and accessible — and how breaking them would diminish the availability of free, ad-supported content that benefits everyone”, Taylor writes.

The Commission says it preliminarily finds that, since at least 2014, Google abused its dominant positions by:

• Favouring its own ad exchange AdX in the ad selection auction run by its dominant publisher ad server DFP by, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.
• Favouring its ad exchange AdX in the way its ad buying tools Google Ads and DV360 place bids on ad exchanges. For example, Google Ads was avoiding competing ad exchanges and mainly placing bids on AdX, thus making it the most attractive ad exchange.

The Commission’s VP, Margrethe Vestager, says that the Commission’s investigation shows that Google may have abused its dominant position by favouring its own adtech services.

The Commission’s preliminary view is that “only the mandatory divestment by Google of part of its services would address its competition concerns”

“Our investigation has shown that Google may hold a dominant position on both ends of the adtech supply chain. On the buy-side with Google Ads and DV 360. On the sell-side with DFP.”

“There is nothing wrong with being dominant as such. What our investigation has shown though, is that Google appears to have abused its market position. It did so by ensuring that both its intermediation tools on the buy- side and on the sell-side would favour AdX in the “matching” auctions”, Vestager says.

“In other words, we are concerned about two potentially anticompetitive conducts by Google, which are both about favouring AdX.”

A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. 

Google is given time to answer and the Commission’s website stresses that “sending a Statement of Objections and opening of a formal antitrust investigation does not prejudge the outcome of the investigations”.

“If the Commission concludes, after the company has exercised its rights of defence, that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of the company’s annual worldwide turnover.”