Google Gets EU Antitrust Probe Into Ad Tech Services
Google is facing a formal investigation from the EU, which is looking to gain more information about the tech company’s position as top digital ad broker on the internet.
The European Union has followed up on allegations that Google has been taking advantage of its positions as the leading digital ad broker on the internet. The formal antitrust investigation will be the most extensive look into one of the main profit maker’s for Google.
On Tuesday, the European Commision announced what the investigation will be directed towards, which includes a wide selection of anticompetitive practices that have allegedly taken place. This is not uncharted territory for Google’s parent company, Alphabet Inc. because there is another investigation taking place by a number of US states. They will also be assessing Google’s preference to its own ad-buying tools and services in the advertising auctions it holds.
The EU investigation will look to go further than the US states because it will also analyse complaints that haven’t become formal inquiries yet, such as the alleged action of excluding competitors from buying ads on YouTube.
On this subject, Margrethe Vestager, the EU’s antitrust chief, had this to say,
‘Online advertising services are at the heart of how Google and publishers monetize their online services. We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.’
This case could be the start of many European competition probes. Depending on what the outcome is, if there is evidence that wrongdoing has taken place, then the EU can issue formal charges. These charges can become fines of anything up to 10% of a business’s global revenue for a year, as well as forcing the business to change the way it operates. On the other side of this, there could also be no charges pressed and the case gets closed.
There has been a growing trend of antitrust enforcement coming out of Europe. For example, Apple also had formal charges brought against it in April. In that case, the investigation is around the control of music distribution apps. Alongside this, the EU has also charged Amazon.com for allegedly utilising data gathered from third party sellers in a nonpublic setting. Both Apple and Amazon deny wrongdoing.
If we cast our minds back to 2015, some of you might be able to remember further antitrust decisions that went against Google. This led to $9 billion worth of fines over the following three years to 2018. This latest filing is the first to come since 2018.
The sale of ad space on the internet is a difficult sector to investigate because of its complexity. This area of Alphabet’s business made up 13% of its revenue in 2020, totaling $182.53 billion. On Tuesday, the EU announced that it believed roughly 20 billion euros were spent overall on digital display advertising in the EU, with Google being the centre point of contact for purchasing those digital ads.
Alongside the US states that are suing Google, the antitrust regulator in the UK has also been analysing the company. This has led Google to remove technology around third-party cookies that are in its Google Chrome web browser. This is a subject the EU will also be looking into. Third party cookies are used to track a person’s internet usage, following them across the different websites that they visit. It is an extremely common technique employed by businesses looking to target their advertisements more effectively.
The competition laws will be under investigation alongside the EU’s privacy law, GDPR. On this topic the commission said this in a statement,
‘Competition law and data protection laws must work hand in hand to ensure that display advertising markets operate on a level playing field in which all market participants protect user privacy in the same manner.’
For years now, publishers and ad-tech companies that are competing with Google have taken issue with the company’s ownership of some of the most frequently used tools for buying and selling ad space. They argue that the control they have over these areas could lead Google to make unfair decisions.
Time will tell how the results of the investigation come out. What is interesting about this investigation is that it shows the EU is holding tech companies more accountable for their actions then they have done in the past.
Apple Inc on Monday released the results of a study that found its App Store spurred $458 billion in sales last year from categories such as retail of physical goods, ride-hailing and advertising from which the iPhone maker takes no commission.