Google may have to break-up its adtech business to address EU's competitive concerns

Alphabet's Google has been served a ‘statement of antitrust’ by the European Union. The preliminary ruling points out that the company has breached EU’s antitrust rules as it distorts competition in the advertising technology (adtech) industry.

The European Commission has taken an issue with Google favoring its online display adtech services. This has been detrimental to the business of other advertising technology services, advertisers and online publishers, the commission took note. 

Margrethe Vestager, Executive Vice-President in charge of competition policy, European Commission, comments, “Our preliminary concern is that Google may have used its market position to favor its own intermediation services. Not only did this possibly harm Google’s competitors but also publishers’ interests, while also increasing advertisers’ costs. If confirmed, Google’s practices would be illegal under our competition rules.”

The Commission further believes that a behavioral remedy is likely to be ineffective as Google is a dominant entity on both sides of the market, with its publisher ad server and with its ad buying tools.

Hence, the EU has recommended that Google sells parts of its adtech business to address competition concerns.

The commission had opened an investigation into Google’s anti-competitive behavior in 2021. The final findings could lead to the European Union fining Google 10% of its annual global turnover.

Google has a few months to appeal for a before the EU issues a decision closed hearing in front of senior Commission antitrust officials and their national counterparts. 

Google has disagreed with the Commission's charge as of now. Dan Taylor, vice president of global ads, Google, says that the statement of objections from the European Commission sets out claims that are not new.

“It (EU’s Statement) fails to recognise 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.”