Google may be forced to sell part of its advertising business after being accused of violating European Union antitrust laws. After a long investigation, the European Commission suggested that “compulsory divestment” is the only way the search engine can solve the problem.
Why we care: If Google sells part of its advertising business, it could mark the beginning of a new era of digital marketing with a more competitive market and fairer prices. This could lead to more transparency, greater campaign control for advertisers, and greater innovation, which could lead to the creation of new advertising tools.
What is happening: The European Commission carried out a report on the operation of Google Ads and found that the search engine tends to favor its own ads, causing difficulties for competing providers.
When discussing possible solutions, the commission said behavioral improvements would not be enough to rectify the issue. Instead, it has recommended that the search giant sell part of its business.
What did Google say? Google published a statement today criticizing the commission’s findings. Dan Taylor, VP of Google Ads, wrote:
“The European Commission’s Statement of Objections sets out claims that are not new and relate to a small part of our advertising business. It fails to recognize how advanced advertising technology helps marketers reach customers and grow their businesses, at the same time which lowers costs and expands options for consumers.
“Ad tech is very competitive and constantly evolving. We compete with hundreds of companies in this space, including household names like Amazon, Microsoft and Meta, as well as specialist ad tech companies like Criteo, The Trade Desk and many others Even media companies and retailers now offer competing ad technologies.
“The digital advertising market enjoys competitive pricing, lively innovation and strong competition, helping advertisers, publishers and consumers. We look forward to showing how our ad technology tools help make the Internet open and accessible, and how to break – would diminish the availability of free, ad-supported content that benefits everyone.”
Has this happened before? Earlier this year, nine US states (Michigan, Nebraska, Arizona, Illinois, Minnesota, New Hampshire, North Carolina, Washington and West Virginia) joined forces to file a similar lawsuit against Google.
The states accused the search engine’s advertising business of violating antitrust regulations. To rectify the matter, they urged Google to break their Ad Manager suite, claiming it exploited their dominance of online advertising. Google denied the claims and asked that the case be dismissed.
In 2020, Google was also accused of again violating antitrust laws to maintain its position as the leading search engine. This case is due to go to trial in September.
Deeper Dive: you can read Full answer from Google to the European Commission’s announcement about its advertising technology.
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