Google’s Dominance In Ad Tech Under Scrutiny, EU Alleges Antitrust Breach, Suggests Compulsory Divestment

PARIS, FRANCE - JUNE 14: Google logos are displayed during the Viva Technology conference at Parc des Expositions Porte de Versailles on June 14, 2023, in Paris, France. Viva Technology, the biggest tech show in Europe but also in a unique digital format, for 4 days of reconnection and relaunch thanks to innovation. The event brings together startups, CEOs, investors, tech leaders and all the digital transformation players who are shaping the future of the Internet. The annual technology conference, also known as VivaTech, was founded in 2016 by Publicis Groupe and Groupe Les Echos and is dedicated to promoting innovation and startups. (Photo by Chesnot/Getty Images)

Alphabet Inc’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google has been accused by the European Union of violating antitrust regulations in the field of advertising technology (ad tech). To address the EU’s concerns, the Union aims to dismantle certain segments of the tech giant’s business.

PARIS, FRANCE – JUNE 08: In this photo illustration, Google Chrome search engine logos are displayed on the screen of a computer on June 08, 2023, in Paris, France. Users of the Google Chrome search engine are advised to update the software on their web browser as soon as possible to ensure their security. The American giant has just released a security update to correct a computer flaw representing a high risk for Internet users. This is the third time since the beginning of the year that Google has spotted a “zero day” flaw, that is to say, a computer flaw not directly resolved, a favorite prey of hackers.(Photo illustration by Chesnot/Getty Images) 

The European Commission has made an initial determination that Google holds a dominant position in the European market for publisher ad servers and programmatic ad-buying tools for the open-up, CNBC reported.

It has also stated that Google has been exploiting this dominant position since at least 2014.

In April, Google proposed to argue the U.S. Justice Department’s alleged breach of antitrust law to build and maintain its search dominance. 

Alphabet will be allowed to review the concerns raised by the Commission, present a written defense, and request an oral hearing to express their comments.

“The Commission’s preliminary assessment suggests that the only effective solution to address the competition concerns is the compulsory divestment of a portion of Google’s services,” said Margrethe Vestager, the EU Competition Chief.

Vestager added, “Google collects users’ data, sells advertising space, and operates as an online advertising intermediary. Thus, Google is involved in nearly all ad tech supply chain aspects. Our initial concern is that Google may have exploited its market position to favor its intermediary services. These practices may have harmed not only Google’s competitors but also the interests of publishers while simultaneously increasing costs for advertisers. If proven, Google’s actions would violate our competition regulations.”

GOOG shares are down 0.35% at $123.99 during the premarket session on the last check Wednesday.

“For instance, Google could divest its sell-side tools, DFP and AdX. By doing so, we would put an end to the conflicts of interest,” said Vestager a news conference.

Ad revenue amounted to $224 billion that include all Google platforms such as Gmail, YouTube, and AdSense to name a few.

“The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view,” Dan Taylor, Google’s vice president of global ads, said in a statement.

Produced in association with Benzinga

Edited by Alberto Arellano and Jessi Rexroad Shull