Big tech transformations continue as EU orders Google to divest part of its advertising business.
Wednesday’s announcement follows accusations from the competition commission against monopolies.
The order is similar to the recently proposed ‘AMERICA Act’ invoice in the United States.
Explanation of the EU ruling
The EU competition commission stated that the problem lies “with Google favoring its own online display advertising technology services to the detriment of competing ad technology service providers, online advertisers and publishers”.
But the regulator concluded that Google had abused its power by forcing a monopoly on the advertising business. The commission believes that by favoring its ad exchange in ad auctions.
In addition, the commission believes that the only solution to address competition is to force Google to divest parts of its advertising business.
As part of the ruling, Margrethe Vestager made the following statement:
Google is present at almost every level of the so-called ad tech supply chain. Our preliminary concern is that Google has used its market position to favor its own brokerage services.
This not only harmed Google’s competitors, but also the interests of publishers, while increasing costs for advertisers.
The order is not surprising, as the initial investigation began two years ago.
Google responds to monopoly accusations
It is important to note that Google may respond to the allegations and the EU ruling.
In addition, Google may respond to allegations, defend its position in writing, and request an oral hearing to present its work.
Google Ads VP Dan Taylor responded publicly to the ruling:
Our ad tech tools help websites and apps monetize their content and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publishers and advertising partners in this highly competitive industry. The commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view and will respond accordingly.
How will the ruling affect advertisers?
There is no clear indication of the immediate impact the order will have on advertisers.
As Google may respond to the EU ruling, an official declaration of a forced sale may still be a long way off.
Experts in means of payment are following the ruling closely. Navah Hopkins commented on the verdict on LinkedIn:
Image credit: LinkedIn.com, Navah Hopkins, June 2023
There is speculation that years of AI and machine learning could be lost or de-prioritised if companies are forced to divest parts of their business.
The trickle-down effect could hurt advertising performance in the immediate and long term.
Summary
The EU ruling begins a long road for big tech. Not just for Google, but for many other major ad tech platforms.
If the ruling is approved in the EU, it is likely to add fuel to the proposed AMERICA Act in the United States and encourage others to follow suit.
We will continue to update as more information becomes available.
Featured image: EtiAmmos/Shutterstock
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