Google may face the possibility of breaking up part of its empire after the European Union accused the company of abusing its dominance in digital advertising and distorting competition. The EU’s preliminary finding follows a two-year investigation into the company’s threat to competition in the adtech sector. Although Google will be able to argue its case, it is a blow for the company, which generates a significant proportion of its revenue from selling advertising space on its search engine and other services. Advertising revenue in 2022 totalled $224.5bn.
The European Commission accused Google of favoring its online display advertising technology services at the expense of rivals. The Commission said that only the mandatory divestment by Google of part of its services would address its competition concerns. The news comes as Google faces a growing threat from Microsoft, which has infused its search engine Bing with artificial intelligence. Google is not being immediately instructed to break up its business or being fined, as the final outcome of the Commission’s investigation is still pending.
A behavioral remedy is considered to be an inadequate remedy, says EU investigators, which would instead require Google to sell part of its business to address its concerns. Margrethe Vestager, EU antitrust commissioner, in a news conference said, Of course I know this is a strong statement but it is a reflection of the nature of the markets, how they function and also why a behavioral commitment seemed to be out of the question. Google’s VP for global ads, Dan Taylor, said its ad business helped fund sites and apps and businesses to find customers. The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view and we will respond accordingly, he added.
