The ones that its vice president and head of the Competition portfolio has just pronounced in the European Commission were bigger words: “There is no alternative”, only if Google gets rid of “part of its services” in the online advertising business “can they be resolved the problems detected”, Vestager concluded after announcing that the Californian company has abused its dominant position in this sector and has “illegally distorted” it to benefit its own services. “There are very few precedents,” Vestager admitted, but “the inherent conflict of interest in this case,” as Google is the dominant company in all aspects of the business (buying and selling online ads) makes “mandatory divestment.” be the only possible solution. At the moment it is a suggestion but if Google’s response does not satisfy the European Commission, it can become an order.
After two years of investigations motivated by complaints from third-party companies, the community executive has sent a charge sheet to the Mountain View company in which he accuses it of abusing its dominant position by favoring its advertising technology services, known as ‘adtech ‘ in industry jargon, that is, the tools and programs used by advertisers to reach broaden their audiences and measure the impact of their campaigns. According to research from Community Competition services, Google favors “online display of its own ad technology services over rival providers.”
Adtech’s tools “cross” the demand and supply of online advertising space, and “in the milliseconds it takes for a website to load, several algorithms are produced” that decide which of all the available ads are presented to the user at that moment. Often, companies use intermediaries to get the best results; some work for advertisers, others for those who offer online space on websites and apps. There is still a third operator, the platforms where these exchanges take place. “Google offers these three services”, Vestager has detailed: it offers services for advertisers (Google Ads and DV360), also for those who offer advertising space (DFP) and, finally, it also has its own exchange platform, AdX.
According to Brussels, Google has a dominant position in both the supply and demand sectors of online advertising tools and has abused that position to favor its own services. The investigation is not over and Google will be able to defend itself against the accusations. If its explanations or proposals for changes do not resolve the problems detected, the European Commission could not only impose a multi-million dollar fine on the company but, as it has warned today, reach the extreme decision of ordering it to get rid of “part” of its business. in the sector. To date, Google has received fines totaling 8,000 million euros in Europe for its anti-competitive practices but has never been ordered to part with part of its assets to comply with community law on free competition.
“Google has strong market positions at both ends of the ad market,” representing both ad buyers and sellers, “and this creates an inherent and pervasive conflict of interest” that, as long as it remains there, will allow the companies maintain these practices or create new versions that can be very difficult to detect, Vestager has argued. So, in his opinion, in the end the only possible solution will be for Google to stop being the dominant player in all aspects of this lucrative market.
The news has been welcomed by companies trying to compete with the North American giant. “As lead plaintiffs in the Google shopping case, we have experienced first-hand how they bear the cost of fines as part of the cost of doing business and how Google’s proposed remedies do not lead to genuine competition,” said the CEO. from the Kelkoo Group, which has asked the community executive to examine “every remedy” possible to ensure that the case results in “fundamental changes” in the way the online advertising market works.
