Google faces EU breach over anti-competitive adtech practices

BRUSSELS, June 14 (Reuters) – Alphabet’s ( GOOGL.O ) Google may have to sell parts of its lucrative adtech business to address concerns about anti-competitive practices, European Union regulators said on Wednesday, threatening the company with its toughest regulatory penalty to date .

The European Commission outlined its allegations in a statement of objections to Google two years after it opened an investigation into behavior favoring its own advertising services, which could also lead to a fine of as much as 1[ads1]0% of Google’s annual global turnover.

The stakes are higher for Google in this latest clash with regulators as it concerns the company’s biggest moneymaker, with advertising accounting for 79% of total revenue last year.

Advertising revenue for 2022, including from search services, Gmail, Google Play, Google Maps, YouTube ads, Google Ad Manager, AdMob and AdSense, amounted to $224.5 billion.

Google has a few months to respond to the charge. It could also request a closed hearing in front of the commission’s senior antitrust officials and their national counterparts before the EU makes a decision in a process that could take a year or more. The company could also potentially settle by offering stronger remedies than previously proposed.

EU antitrust chief Margrethe Vestager said Google may have to sell parts of its adtech business because a behavioral remedy is unlikely to be effective in stopping the anti-competitive practice.

“For example, Google can sell its sell page tools, DFP and AdX. By doing that, we will end the conflicts of interest,” she said at a press conference.

“Of course I know this is a strong statement, but it is a reflection of the nature of markets, how they work and also why a conduct obligation seemed to be out of the question.”

Google said it disagreed with the commission’s accusation.

“The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EU’s view,” Dan Taylor, Google’s vice president of global ads, said in a statement.

Vestager said the investigation will continue with Google’s introduction of a privacy sandbox set of tools to block third-party cookies on the Chrome browser and its plan to stop making the advertising identifier available to third parties on Android smartphones.

She said the EU had worked closely with competition authorities in the US and UK.

The European Publishers Council, which lodged a complaint with the Commission last year, welcomed the charge.

The commission said Google favors its own online display advertising technology services at the expense of competing ad technology service providers, advertisers and online publishers.

It said Google has abused its dominance since 2014 by favoring its own exchange AdX in the ad selection auction of its dominant publisher ad server DFP, and also by favoring AdX in the way ad buying tools Google Ads and DV360 bid on exchanges. .

Google is the world’s dominant digital advertising platform with a market share of 28% of global advertising revenue, according to research firm Insider Intelligence.

Google had tried to settle the case three months after the investigation was opened, but regulators were frustrated by the slow pace and lack of significant concessions, a person familiar with the matter told Reuters earlier.

Reporting by Foo Yun Chee, additional reporting by Sudip Kar-Gupta; Editing by Philip Blenkinsop, Kirsten Donovan and Lisa Shumaker

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