“European Union Accuses Google of Antitrust Violations in Adtech Industry”

Google Hit with Antitrust Charges by European Commission over Advertising Technology

The European Commission has launched a formal antitrust investigation against Google for its behavior in the advertising technology business. Google’s adtech business is the company’s most significant revenue stream. The commission, which has probed the matter for the past two years, suspects that Google has been unlawfully favoring its AdX over competitors by using DoubleClick for Publishers (DFP) and Google Ads. The commission suspects that this behavior has potentially harmed Google’s competitors in the ad-exchange space, publishers’ interests, and increased advertisers’ costs.

Google’s Dominance in the Adtech Industry

Google has a massive presence in all significant parts of the adtech value chain. Its ad-buying tools and publisher ad server for managing advertising space are dominant in their respective fields, while Google’s AdX is currently the largest ad exchange in existence. Google’s unethical behavior in discriminating against competitors has led to the launch of this formal antitrust investigation.

The Scenarios

The European Commission has stated that Google has been involved in two primary practices. The first one concerns sealed-bid auctions organized by Google’s DFP ad server. In this practice, Google gives its AdX an advantage by giving it a heads-up about rival exchanges’ bids before its own bid.

The second practice is whereby Google Ads places bids on behalf of advertisers. Google’s buy-side tool for advertisers is expected to bid for placements on as many ad exchanges as possible. However, during the commission’s investigation, it showed that Google placed Google Ads bids mainly on Google’s AdX. By so doing, it managed to make AdX the most attractive marketplace, which gave it a significant competitive advantage over rival ad exchanges.

Possible Outcomes

Google has received three antitrust fines from the Commission over the past few years. Apart from paying the fines, Google changed its behavior in those cases. However, in this new case, the Commission is using a different strategy, which could force Google to divest its DFP and AdX sell-side tools, ending its conflicts of interest.

Coordination with the U.S Department of Justice

Vestager, the EU antitrust commissioner, has been coordinating with the US Department of Justice (DoJ) on this case, as well as the Competition and Markets Authority (CMA) in the UK and other national antitrust authorities. In January 2021, the DoJ and several state attorneys general filed similar charges against Google for abusing its monopoly of digital advertising technologies.

Conclusion

The European Commission’s formal antitrust investigation against Google over its advertising technology business practices is a significant blow to the company. If Google is found guilty of unethical behavior, the implications could be substantial, including possible fines and the forced divestiture of its DFP and AdX sell-side tools.