EU suggests breaking up Google’s advertising business in preliminary antitrust ruling

The European Commission a Formal Antitrust Complaint Against Google and its advertising business, saying that its initial view is that “only a mandatory divestment by Google of part of its services will address its competition concerns.” This is a significant step in targeting the search giant’s main source of revenue.

“Our initial concern is that Google may have used its market position to favor its arbitration services,” Margrethe Vestager, executive vice president in charge of competition policy, said in a statement.

The statement of objections issued today is an important step in the EU investigation. Google will now have an opportunity to respond in writing and request a hearing, after which the Commission will decide whether Google has broken antitrust law in the group. If found guilty, the EU’s competition regulator could fine Google up to 10 percent of its global sales and (perhaps more importantly) force it to change the way it operates.

This is a significant charge against what remains Google’s main source of revenue. Although the Alphabet-owned company is best known as the provider of everything from search and OSes to thermostats, it’s advertising that provides most of its revenue. Bloomberg, who previously reported on today’s complaintnoted that Google’s advertising business would bring in about $225 billion for the company in 2022, representing about 80 percent of its annual revenue.

The European Union’s probe into Google’s advertising technology dates back to 2021, when it said it was investigating whether Google unfairly favored its own services over competitors and limited their access to user data . At the time, the Commission’s digital monarch, Margrethe Vestager, said that “Google is present at almost all levels of the supply chain for online display advertising” and that the EU was “concerned that Google made it difficult for rival online advertising services”. to compete in the so-called ad tech stack.”