Google may be forced to sell part of its ad business after being charged with violating the European Union’s antitrust laws. Following a lengthy investigation, the European Commission suggested that “mandatory divestment” is the only way the search engine can resolve the issue.
Why we care: If Google does sell part of its ad business, it could mark the start of a new digital marketing era with a more competitive market and fairer pricing. This could potentially lead to more transparency, greater campaign control for advertisers and increased innovation, which could prompt the creation of new ad tools.
What’s happening: The European Commission conducted a report into the operation of Google Ads and found that the search engine typically tends to favor its own ads, causing difficulties for competing providers.
When discussing potential solutions, the commission said that behavioral improvements would not be enough to rectify the matter. Instead, it has recommended that the search giant sells off part of its business.
What has Google said? Google released a statement today criticizing the commission’s findings. Dan Taylor, Vice President of Google Ads, wrote:
“The Statement of Objections from the European Commission sets out claims that are not new and relate to a narrow part of our advertising business. It fails to recognize how advanced advertising technology helps merchants reach customers and grow their businesses — while lowering costs and expanding choices for consumers.
“Ad tech is fiercely competitive and constantly evolving. We compete with hundreds of companies in this space, including household names like Amazon, Microsoft, and Meta as well as specialized advertising technology companies like Criteo, The Trade Desk, and many others. Even media companies and retailers now offer competing advertising technologies.
“The digital advertising market enjoys competitive pricing, lively innovation, and robust competition — helping advertisers, publishers, and consumers. We look forward to showing how our ad tech tools help make the internet open, and accessible — and how breaking them would diminish the availability of free, ad-supported content that benefits everyone.”
Has this happened before? Earlier this year, nine U.S. states (Michigan, Nebraska, Arizona, Illinois, Minnesota, New Hampshire, North Carolina, Washington, and West Virginia), joined forces to bring a similar lawsuit against Google.
The states accused the search engine’s ad business of violating antitrust regulations. To rectify the matter, they urged Google to break up its Ad Manager suite, claiming it was exploiting its online advertising dominance. Google denied the claims and asked for the case to be dismissed.
In 2020, Google was also accused of breaching antitrust laws again in order to sustain its position as the leading search engine. This case is set for trial in September.
Deeper dive: You can read Google’s full response to the European Commission announcement about its advertising technology.