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European Union (EU) regulators on Wednesday told Google that it "breached EU antitrust rules by distorting competition in the advertising technology industry." The regulators are now trying to dismantle the technology conglomerate's advertising branch.
The EU's antitrust regulator, the European Commission (EC), said, "Google abused its dominant positions" by purchasing and selling online ads across third-party websites and apps.
Citing conflicts of interest, the commission has said that its preliminary view is that Google must sell portions of its ad business to resolve what the commission called "inherent conflicts of interest" in the digital advertising sector. The commission, however, did not clarify what specifically is to be sold.
According to regulators, Google "holds a dominant position" on "both sides of the market with its publisher ad server and with its ad-buying tools."
The EU's announcement regarding Google reads:
"The Commission preliminarily finds that, in this particular case, a behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones. Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends. Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google. The Commission's preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns."
The European Commission is not the only entity going after Google for its monopoly on digital advertising. In January, the U.S. Department of Justice (DOJ) and 8 states filed an antitrust lawsuit against the tech giant regarding its ad business. According to that lawsuit, Google illegally monopolized the digital ad market. It was the second suit that federal authorities have brought against Google.
In January, U.S. Attorney General Merrick Garland said in a press release, "For 15 years, Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics, to insulate itself from competition, and force advertisers and publishers to use its tools."
Google's parent company, Alphabet, reported a $60 billion profit last year that it earned through its advertising empire. The 2 U.S. lawsuits and the case brought by the EC could have a widespread impact on Alphabet.
Margrethe Vestager, Executive Vice President of the European Commission who oversees digital and competition policy said of the case, "So Google is present at almost all levels of the so-called adtech supply chain. Our preliminary concern is that Google may have used its market position to favour 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."
A ZeroHedge report indicates that the EU is considering forcing Google to break up its ad-tech business. In conjunction with the pressure the tech company is facing from U.S. authorities as well, it might be the end of Google's ad business or at least its complete monopoly of online advertising.
It should be noted that Google is not the only tech company being targeted by the EC. Facebook's parent company, Meta, was recently slapped with a record $1.3 billion fine for transferring data from European users to the U.S. without having the proper security in place to protect the data from being scrutinized by the U.S. government's "surveillance programmes." As the internet becomes more regulated observers can most likely expect to see more fines, antitrust lawsuits, and penalizations for both monopolizing markets and mishandling user data.
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