The European Commission is taking the next step in an important competition procedure against Google’s advertising activities. On Wednesday, the commission demanded that the internet company sell parts of its advertising services and therefore parts of its ATM. The central question here is whether Google has given itself an advantage over its competitors in advertising services and thereby distorted competition.
“The company collects user data, sells advertising space and acts as an intermediary for online advertising,” said EU Commissioner Margrethe Vestager, who is responsible for fair competition. Google is therefore represented at almost all levels of the adtech industry. “We fear that Google has used its market position to favor its own brokerage services,” said the politician.
Google said: “We disagree with the Commission’s position and will respond accordingly.” The Commission’s investigations focused on a narrowly defined aspect of the advertising business and were not new. “Google remains committed to creating value for its publishers and advertising partners in this highly competitive industry.”
“Our advertising technology tools help website and app providers fund their content and enable businesses of all sizes to effectively reach new customers,” said Google CEO Dan Taylor.
Google risks severe penalties
There are huge fines in the hall. Google may respond to the allegations. But if the Commission concludes there is sufficient evidence of a breach of EU law, it can impose a fine of up to 10% of annual global turnover. On the other hand, Google could defend itself legally.
Main source of income
Google’s main source of income is online advertising, as the Commission points out. The company not only makes money by advertising on its own websites such as Google Search. The company also mediates between advertisers who want to place their advertisements online and publishers, bloggers or other content creators who, for example, want to place advertisements on their website.
information advantage
Google occupies a special position in the online advertising market: the group not only sells advertisements, but also operates the platform through which they are delivered online. According to experts, this gives Google an information advantage when it comes to how consumers use the internet. This knowledge can also be used to show ads more specifically than others.
‘Abuse of dominant position since at least 2014’
The Commission has come to the preliminary conclusion that Google has been abusing its dominant position since at least 2014. Specifically, for example, it is about the fact that Google would have favored its own ad exchange AdX by informing AdX in advance about the best offer from competitors. In addition, the internal advertising service Google Ads, which other companies can use to place ads on Google’s pages, would have avoided competing ad exchanges, making AdX the most attractive ad exchange.
As the European Commission always emphasizes, the investigations are in principle conducted with an open outcome. In another case against Google at the end of last year, the competition authorities concluded that there was no distortion of competition.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
