EU Regulators Seek Breakup Of Google's Ad Business Over "Illegal" Practices

On Wednesday, European Union regulators informed Google that it "breached EU antitrust rules by distorting competition in the advertising technology industry." Regulators seek to break up the US multinational technology company's advertising empire. 

The European Commission, the European Union's antitrust regulator, said, "Google abused its dominant positions" in the buying and selling of online ads across third-party apps and websites. 

The commission said that its preliminary view is Google must sell segments of its ad business to resolve the "inherent conflicts of interest" in digital advertising. However, there was no mention of what was to be sold. Regulators said Google "holds a dominant position" on "both sides of the market with its publisher ad server and with its ad-buying tools." 

"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 EU's announcement comes months after the US Justice Department and eight states filed a lawsuit over Google's ad business, claiming it illegally monopolizes the online ad market. This is the second US antitrust suit federal authorities have brought against the company's ad empire. 

"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," Attorney General Merrick Garland wrote in a press release in January. 

The outcome of these three cases could have widespread implications for Google's parent company, Alphabet, which recorded $60 billion in profit last year from advertising. 

"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," Margrethe Vestager, the executive vice president of the European Commission who oversees digital and competition policy, said in a statement.

Earlier this week, The Wall Street Journal reported the EU was considering ordering a breakup of Google's ad-tech business. And with pressure on both sides of the Atlantic, the walls are closing in on Google's ad business.