Online advertising: Brussels threatens Google with dismantling

Brussels is attacking Google right at the heart of its economic model. This Wednesday, June 14 in the middle of the day, Margrethe Vestager, the vice-commissioner of the European Commission, in charge of competition issues, estimated on a “preliminary basis” that the American giant had abused its dominant position in the field of advertising. on line. "We are concerned that Google has illegally distorted competition in the adtech industry," she said at a press conference.

This formal complaint follows an investigation opened in June 2021 on the Californian firm. Google's management is indeed present at many links in the online advertising chain. It helps both websites to sell their advertising space, and advertisers to occupy these spaces. By playing intermediaries, Google is thus accused of capturing too much of the value and preventing the emergence of a competing offer. “Google holds a dominant position on both sides of the adtech industry. And our investigation raises fears that he abused his dominant position to favor his own AdX platform, and in particular by charging significant fees to publishers, ”said Margrethe Vestager.

Among the grievances alleged against Google, Brussels believes that the group favored its own AdX ad exchange in the auctions managed by its own advertising server. He would have told AdX the best current offers in advance in order to ensure that he won the auction. Another fault retained, a favoritism of AdX “in the way in which its tools of purchase of advertisements Google Ads and DV360 place their offers on the exchanges of advertisements”

This complaint is arguably the most significant of the current Commission's (five-year) mandate. It marks the beginning of a long procedural path, which could last for years, and with an uncertain outcome. Margrethe Vestager said she was ready on Wednesday to force Google to sell part of its advertising technology empire if regulators conclude that a change in behavior will not be enough to solve the competition problem.

“The sale of part of Google's services in the field of advertising technologies cannot be ruled out. We see no alternative today to put an end to conflicts of interest,” she said. "Of course, I know that's a strong statement, but it reflects the nature of the markets and how they work," added the European official.

The obligation to divest, extremely rare for European antitrust, is seen as the Commission's atomic weapon. A few months ago, the US Department of Justice had filed a similar complaint against Google, while calling for the dismantling of the company. The precedents for the tech giants to split are still very rare, beyond the break-up of the AT monopoly

“Our ad technologies help websites and apps fund their content and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for its publishing partners and advertisers in this highly competitive sector”, immediately reacted for his part Dan Taylor, vice president of global advertising at Google. “The European Commission's investigation focuses on a narrow aspect of our advertising activities and is not new. We do not agree with his point of view and we will respond accordingly.

This is not the first time that Google has had to respond to accusations from Brussels. The American has already been convicted three times in the past. In 2022, for example, it was ordered to pay a fine of 4.1 billion euros for abuse of a dominant position in its Android operating system.

In the first quarter of 2023, Google's online advertising sales activities accounted for 14% of its advertising revenue (i.e. 10% of overall revenue over the period). A few days ago, Google boss Sundar Pichai embarked on a major tour across Europe, settling down in Brussels.