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The European Union has opened a formal antitrust investigation into allegations that Google is violating its leadership role in the advertising technology sector, the most comprehensive case yet to be considered in this column of the tech giant’s business.
The European Commission, the European Union’s largest antitrust enforcement body, said Tuesday that its investigation, which has been unofficially underway since at least 2019, will look into a wide range of alleged anticompetitive business practices around Alphabet Inc. GOOG ad brokerage at 0.71% and sharing of user data with advertisers across websites and mobile apps – one of the company’s newest antitrust screening areas.
Some EU investigations will cover a similar basis to a case brought last year against Google by a group of US states led by Texas. Similar areas include allegations that Google favors its own ad buying tools in the ad auctions it runs.
But the EU investigation will also cover complaints that have not yet been the subject of official inquiries anywhere, including Google’s alleged exclusion of competitors from brokering the purchase of ads on Google-owned video site YouTube.
EU antitrust chief Margrethe Vestager said the commission was concerned that Google had made it difficult for competitors to compete in advertising technology. Photo: Stephanie Leacock/Shutterstock
The EU investigation is also examining Google’s plans to block certain types of user tracking technologies on its platforms, such as the Chrome browser and the Android mobile operating system. Reducing such tracking responds, at least in part, to pressure from privacy regulators and activists, but has led to antitrust complaints from competitors in the advertising technology industry.
“Online advertising services are at the heart of how Google and publishers monetize their online services,” said Margrethe Vestager, EU antitrust chief. “We are concerned that Google has made it difficult for online advertising services to compete in the so-called ad technology stack.”
A Google spokeswoman said European companies are choosing to use Google’s advertising tools “because they are competitive and efficient,” adding that the company “will continue to engage constructively with the European Commission to answer their questions.”
Opening the case is a key procedural step in European competition investigations. If the commission finds evidence of wrongdoing, it can then file formal charges that could lead to fines of up to 10% of the company’s global annual revenue and orders to change behavior. But the commission can also close the case without charges.
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Google’s new case in the European Union is the latest example of a wave of antitrust enforcement in Europe. In April, the committee filed formal charges against Apple Inc. Allegedly abusing its control over the distribution of music streaming apps, including Spotify. In November, Amazon.com Inc. was formally charged. Allegedly using non-public data it collects from third-party vendors to compete unfairly against them. Both companies denied any wrongdoing.
Tuesday’s case is the first time the commission has opened a formal case against Google since it issued three antitrust decisions against the search giant, backed by $9 billion in fines, between 2015 and 2018. Google critics argued that those cases did not slow Google’s growing business Its profit increased 17% in 2020 to $40.27 billion.
Now the EU is taking its broadest look yet at Google’s business of brokering the sale of ads, a complex sector that accounted for 13% of Alphabet’s $182.53 billion in revenue last year. The European Union said on Tuesday it estimated the total online display advertising business in the European Union to be around 20 billion euros, or $23.8 billion, in 2019, with Google playing a key role as an intermediary.
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While the EU case is unique in bringing together many different sets of complaints about Google’s role in digital advertising, some areas of the EU case have been the focus of other cases in recent months. The Texas-led group of US states, for example, sued Google in December 2020 for allegedly operating a digital advertising monopoly, taking advantage of its power in one part of the ad chain to force publishers or advertisers to use other Google-owned tools. This issue is still going on.
Google has also settled, or is in the process of settling, investigations on some of the same topics the European Union is investigating. For example, the company made concessions to UK antitrust regulators early this month to close a British investigation into Google’s plans to remove technology called third-party cookies from its Chrome browser – one of the issues the European Union said it would investigate.
Companies that use third-party cookies to track people’s browsing habits across multiple websites have complained that changing Google could leave them at a disadvantage. Google has promised to treat competitors fairly and to give the UK authority at least 60 days’ notice before removing cookies, so that the authority can review its plan and possibly force changes.
To settle a French antitrust case, Google also agreed earlier this month to pay nearly $270 million and make it easier for rival ad technology tools to be used. This case is also similar to a one-line inquiry from the European Commission, which is examining whether ad exchanges, AdX, and Google’s ad buying tools, called DV360 and Google Ads, gave unfair advantages to each other.
Publishers and ad technology competitors have complained for years that Google’s ownership of some of the most frequently used tools for buying, selling, and auctioning ads has led it to act unfairly. They also said that Google’s brokering of third-party ad sales as well as its ownership of its ad-supported products, such as YouTube, creates a conflict of interest.
Google’s battle with the European Union
One relatively new area the commission is investigating is Google’s move, at the beginning of 2016, to require advertisers to purchase ads on YouTube using Google’s advertising tools rather than third-party tools. Google Ad-tech competitors have since argued that the decision has held back ad tech competitors because YouTube is by far the largest online video site.
Brian O’Kelley, who was the co-founder and CEO of AppNexus, an ad technology company that suffered from the decision and was later sold to AT&T Inc. He said regulators may need to order the winding up of some tech companies because the fines are not deterrent. “Even if they had imposed a $10 billion fine, that would have been a great decision for Google,” Mr. O’Kelly said.
The commission is also investigating Google’s announcement earlier this month that it would stop allowing Android apps to see users’ unique advertising identifiers if those users chose not to opt out of targeted advertising. This comes after Apple moved to require app developers to obtain permission before collecting a user’s unique advertising identifier.
Apple’s move has already been the subject of antitrust scrutiny, following complaints from publishers who said it would reduce their ability to target ads. The French competition authority dismissed a complaint against Apple on this basis in March.
Access to user data is a line of investigation. One area the EU said it would investigate is Google’s restrictions on third parties, such as advertisers and other competitors, from accessing data about users available for Google’s own advertising services.
“We will also look at Google’s policies on user tracking to ensure they are in line with fair competition,” Ms Vestager said.
Write to Sam Schechner at [email protected] and Parmy Olson at [email protected]
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