Margrethe Vestager has a long history as the woman who took on US tech companies. Whether Apple or Amazon, Facebook or Google, the EU’s top competition watchdog has taken on almost all the giants whose products permeate people’s everyday lives. Sometimes it was about allegedly unfair tax deals with EU member states, sometimes about unfair competition and market dominance. The Executive Vice President of the EU Commission has imposed three antitrust fines on Google alone. She had the Android operating system in her sights just as much as Google Shopping. This has already cost the group more than eight billion euros.
What the responsible persons in California’s Mountain View did not understand, at least that’s how the EU Commission sees it. That’s why proceedings number four are now against Google’s parent company, which is now called Alphabet. And this time the authority is threatening the company with the ultimate punishment: the breaking up of its core business with advertising on the Internet, which still accounts for 80 percent of sales. At the end of the day, Google would have to sell at least parts of it if the Commission were to prevail. Vestager announced on Wednesday that the authority had the company after two years of investigation a so-called “Statement of Objections” sent. Such letters are an important formal step in the EU antitrust proceedings, which usually last several years and often end with a showdown at the European Court of Justice in Luxembourg.
The Commission is convinced that Google has distorted competition in the online advertising market, Vestager said. This is the business area in which Google automatically calculates and offers advertising space and prices for advertisers and publishers as soon as a user clicks on a website. Google dominates this market worldwide along the entire value chain. The preliminary result was that the group had exploited its dominant position at least since 2014. “This has allegedly harmed not only Google’s competitors, but publishers’ interests as well, while increasing advertisers’ costs,” Vestager said.
Google is said to have preferred its own advertising marketplace with tricks
Founded in 1998, Google has become famous, successful and powerful as a search engine. The group earns money at all levels: It sells advertising space on its own websites and apps, with the ads in the search engine being the most well-known. At the same time, Google mediates between advertisers who want to place online ads and the operators of websites – these are, for example, newspaper publishers who offer banner advertising.
Publishers use so-called ad servers with which they can manage their advertising space. Companies that place ads use special programs to control their automated advertising campaigns – for example, to target specific customer groups. Both meet on online marketplaces to buy and sell advertising space.
Google potentially earns money everywhere. The Commission is now accusing the group of having twice preferred the in-house auction platform AdX. Before advertising exchanges like AdX can offer auctions, they apply for these auctions. Google’s ad server provider is said to have informed AdX about the bids of the competition, so that Google’s advertising exchange was able to outperform other marketplaces. On the other hand, Google is said to have placed advertisers’ bids on AdX – which made Google’s marketplace the most important and attractive.
Because of the “inherent conflicts of interest”, a partial sale of the business is the cleanest solution, the commission said.
“Like Goldman Sachs operates the New York Stock Exchange.”
The group rejected the suspicions. “The commission’s investigation focuses on a narrowly focused aspect of our advertising business and is not new,” said Dan Taylor, Google’s advertising business chief, in an emailed statement. “We disagree with the Commission’s view and will respond accordingly.” Group circles said they would resist demands to even partially withdraw from the business. You compete with hundreds of players in this field.
The EU Commission is not the only competition watchdog currently taking on Google. The US Department of Justice released a similar lawsuit against Google in January. Here, too, it was said that Google was exploiting its dominant position and harming the competition. And in the US, too, prosecutors suggested that Google should sell part of its business. Unlike in the EU, however, the US regulator found that Google had been violating antitrust law for 15 years (EU Commission: since 2014).
Back then – in 2008 – Google bought the Doubleclick platform, which offered large-scale advertising space on the web outside of the Google empire, making itself indispensable for advertisers. When the indictment was filed in January, Deputy Attorney General Jonathan Kanter quoted internal emails that made it clear that some Google employees were well aware of the company’s market power: “It’s like Goldman Sachs operating the New York Stock Exchange.” , wrote one.