EU wants Google ad business broken up over competition issues
Tech giant is ‘setting the rules’ on supply and demand, EU vice president says
We are seeing an artificial intelligence battle between Microsoft and Google: Beth Kindig
I/O Fund CEO and lead tech analyst Beth Kindig provides insight on stock performance and the development of AI on 'Making Money.'
Antitrust regulators at the European Union (EU) say Google must sell a portion of its digital advertising business to ease competition concerns.
According to the EU, the tech giant violated antitrust rules in the advertising technology industry by favoring its own services to the detriment of other advertisers and online publishers.
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The European Commission, the bloc's executive branch and top antitrust enforcer, said its preliminary view after an investigation is that "only the mandatory divestment by Google of part of its services" would satisfy the concerns.
Shares were little changed on the news and have advanced over 40% this year.
The 27-nation EU has spearheaded a global effort to regulate Big Tech companies by implementing standards around artificial intelligence, after previously relying on large fines, including three antitrust penalties for Google worth billions of euros (dollars).
Meanwhile, Google said it disagreed with the finding and "will respond accordingly." The company can make its case before the commission issues its final decision.
Sissie Hsiao at the Google I/O developers conference on May 10, 2023, in Mountain View, California. (Justin Sullivan / Getty Images)
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Dan Taylor, Google’s VP of global ads, said the company’s ad technology tools help websites and apps fund their content while enabling businesses of all sizes to effectively reach new customers.
"Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector," he added.
EU flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. (Yves Herman/File / Reuters Photos)
The commission's decision comes after an initial investigation began in June 2021.
European Commission Vice President Margrethe Vestager said Google is dominant on both sides of the ad-selling market but abused the position by favoring its own ad exchange, reinforcing its ability to charge a high fee for its services.
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"Google is representing the interests of both buyers and sellers. And at the same time, Google is setting the rules on how demand and supply should meet," she continued at a news conference." This gives rise to inherent and pervasive conflicts of interest."
The EU said YouTube was also scrutinized by the commission to determine if Google was using the video sharing site’s dominant position to favor its own ad-buying services by imposing restrictions on contemporaries.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GOOGL | ALPHABET INC. | 171.49 | +2.54 | +1.50% |
Google's ad tech business is also under investigation by Britain's antitrust watchdog and faces litigation in the U.S.
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The Associated Press contributed to this report.