European Union (EU) antitrust officials made a groundbreaking ruling on Wednesday, June 14, by suggesting the internet giant Google sell off a portion of its profitable digital advertising business due to competition concerns.
After conducting an inquiry, the European Commission (EC), which is the bloc's executive body and top antitrust enforcer, came to the conclusion that "only the mandatory divestment by Google of part of its services" would address the issue.
The EU's 27 member states have been at the forefront of the international effort to regulate tech giants like Facebook, Google, and Amazon by passing groundbreaking regulations on AI and issuing massive fines in the past.
Historic EU Decision to Order Business Units to Break Up
According to ABC News, this is the first time the EU has ordered a tech company to break up major elements of its business for violating the EU's stringent antitrust regulations. However, the specifics of this order have not been made public.
Now that the commission has given Google the opportunity to respond, it may present its case in defense. The corporation has said that it disagrees with the conclusion and will respond accordingly since the EU inquiry only pertains to a small portion of the company's advertising operations.
According to Dan Taylor, Google's vice president of global ads, "Our advertising technology tools help websites and apps fund their content and enable businesses of all sizes to effectively reach new customers." Although competition in the industry is intense, Taylor said that Google is dedicated to helping its publisher and advertisement partners succeed.
Probe Whether Google Favored Its Own Online Display Ads
The decision is the result of an investigation begun by the commission in June 2021 into allegations that Google abused its dominant position in the market for online display advertising technology services to the detriment of competitors in the publishing, advertising, and technology sectors.
EC Vice President Margrethe Vestager said Google dominates both the buying and selling sides of the advertising business. Based on the commission's findings, Google exploited its dominant position by giving preferential treatment to its own ad exchange, which allowed it to increase its service fees.
"Google is representing the interests of both buyers and sellers. And at the same time, Google is setting the rules on how demand and supply should meet. This gives rise to inherent and pervasive conflicts of interest," she stated at a press conference, according to AP News.
The commission looked into YouTube specifically to see whether Google was abusing its dominating position to unfairly limit other ad-buying businesses in favor of its own.
In addition to these investigations in the EU, Google's ad tech company is being scrutinized in the UK and the US.
