European Commission could move to break up Google’s ad empire

The European Commission announced today that Google may have violated EU antitrust law by controlling too much of the online advertising industry, and that it could move to force the company to divest part of its advertising business if it wants to continue operating in Europe.

In a preliminary finding issued this morning, the Commission said that Google’s high degree of control over both the supply and demand side of the advertising technology market threatens free competition in that market and that it could force Google to sell off some of its core business to address those concerns.

“The Commission preliminarily finds that, in this particular case, a behavioral remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones,” the statement read.

Specifically, the Commission accused Google of informing its AdX ad exchange, in advance, of the best bids from competitors, giving it a competitive advantage over them. It further said that the company’s programmatic ad buying tools like Google Ads and DV360 were used to funnel business to AdX by prioritizing them over rival ad exchanges.

This behavior, according to the EC, further consolidates Google’s stranglehold on the online advertising market and enables the company to charge artificially high fees for its services. If proved, such behavior would violate Article 102 of the Treaty on the Functioning of the European Union, which bars “abuse of a dominant market position.”

It’s important to note that these findings are preliminary, as noted, and that Google will have the opportunity to examine the Commission’s documentation of those findings and contest them via written opinions and in an oral hearing. A final decision will not be forthcoming until Google has had a chance to defend itself, but could — if it confirms the EC’s preliminary findings — result in a decision barring that conduct and fines of up to 10% of Google’s annual global turnover.

The lion’s share of Google’s annual revenue — about $283 billion in 2022 — comes from its advertising business, which, coupled with the size of the European market, makes the Commission investigation a major challenge for the search giant.

Google responded with a statement of its own, saying that the Commission’s statement of objections “focuses on a narrow aspect of our advertising business and is not new.”

“We disagree with the EC’s view and will respond accordingly,” said vice president of global ads Dan Taylor.