Brussels Accuses Google of Abuse of Power in Online Advertising

This article was last updated on June 15, 2023

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Brussels Accuses Google of Abuse of Power in Online Advertising

The European Commission has once again accused Google of abuse of power, specifically in the realm of online advertising. As the dominant player in the market, Google is alleged to have placed its interests above fair competition. The consequence of this charge could be a billion-dollar fine and potentially a forced sale of one of Google’s business units.

Google, originally known as a search giant, has expanded its services to include a wide range of offerings from Google Maps to YouTube. The main source of revenue for the company is advertising. This includes both the ads visible when users perform a search via Google as well as the behind-the-scenes negotiations for advertising space across the internet. These are the areas that Brussels is now scrutinizing.

Three Tiers of Online Advertising

The online advertising world can be divided into three main parts: advertisers who want to place ads online, publishers who want to display those ads on their sites, and intermediaries who facilitate the transactions between advertisers and publishers. Google has products that operate in each of these tiers.

Abuse of Power Since 2014

The European Commission alleges that Google has been engaging in abuse of power since at least 2014, making it a nearly ten-year affair. For example, Google is accused of sharing sensitive information about competitors’ bids with its own intermediary. This gives Google’s intermediary an unfair advantage and increases Google’s overall control of the market, allowing the company to charge higher prices for its advertising services. The European Commission suspects that Google’s actions have violated competition rules.

Typically, after finding such violations, the next step for the European Commission would be to impose a hefty fine and demand changes. However, in this case, the Commission believes that mere adjustments will not suffice. They argue that there is a fundamental conflict of interest at play. As a result, the only viable option would be for Google to divest itself of some of its advertising technology. This is the fourth case that the European Commission has brought against Google, and in each of the previous cases, Google has been hit with billion-dollar fines.

Google has appealed all of the cases, and they are currently pending at the European Court of Justice. This means that it could be several years before there is a final ruling on this particular matter. The question of whether Google will need to divest a business unit before a final decision is reached remains uncertain.

Google Disagrees with the European Commission

In response to the European Commission’s allegations, Google has voiced its disagreement. Dan Taylor, Vice President of Global Ads at Google, stated, “The investigation focuses on a narrow segment of our advertising services and is not new.” The company argues that its ad technology assists websites and apps in monetizing their content and aids businesses in reaching new customers. Google also vowed to fight against any divestment of its business units in light of the European Commission’s demands.