European Union regulators took goal on the coronary heart of Google’s enterprise mannequin on Tuesday, asserting that the Silicon Valley large is the topic of a brand new antitrust investigation for doubtlessly abusing its dominance within the internet advertising market to stifle competitors.
The investigation is a part of a broader push by the European authorities to clamp down on the world’s largest know-how corporations. Amazon, Apple and Facebook are additionally the topic of antitrust actions by the 27-nation bloc, and the European Union is drafting new antitrust and digital providers legal guidelines to additional tighten oversight of Big Tech.
Online promoting has helped Google develop into one of many world’s most dear and highly effective corporations, with its father or mother firm, Alphabet, incomes a web revenue of $40 billion final yr. But publishers equivalent to News Corp, in addition to rival digital promoting companies, have lengthy complained that Google’s dominance makes it tougher to draw promoting income from their web sites and for rivals to realize floor.
The European Commission, the bloc’s govt physique, mentioned the investigation was centered on the show promoting market, which is price an estimated $24 billion in Europe and the place Google presents a lot of providers to each advertisers and publishers. The firm collects knowledge to focus on promoting, sells advert house on web sites throughout the web and presents providers that work as an middleman between advertisers and publishers.
“We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack,” Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy, said in a statement.
“A level playing field is of the essence for everyone in the supply chain,” she said.
Announcing the start of the formal investigation is one step in a process that could drag on for years. Google could face fines of up to 10 percent of global revenue and demands that it change its business practices if found guilty.
In focusing on advertising, the authorities are focusing on a cornerstone of Google’s financial success. Its dominance has helped the company build a digital empire in internet search, email, entertainment, maps, cloud computing, smartphones and other consumer electronics, shopping, and autonomous driving. With a market value of more than $1.6 trillion, Google is one of the world’s largest companies.
The commission’s investigation focuses on ways that Google leverages its power in the advertising technology market to limit competition, including forcing advertisers to use certain Google services to buy display advertising on YouTube. Investigators said they would also examine a new Google policy for its Chrome browser intended to replace tracking “cookies” placed on websites with a new system created by Google.
A Google spokeswoman said the company would “continue to engage constructively with the European Commission to answer their questions and demonstrate the benefits of our products.”
“Thousands of European businesses use our advertising products to reach new customers and fund their websites every single day,” the spokeswoman said. “They choose them because they are competitive and effective.”
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Agustín Reyna, a director at the European Consumer Organization, said the investigation was a “significant move” by the European Commission. “Fair competition in this market is important for consumers because it could encourage alternative, privacy-friendly advertising models to emerge,” he said.
This month, Google settled a similar antitrust investigation by the French authorities, with the company agreeing to pay roughly $270 million in fines and make it easier for rivals to use some of its advertising services.
In Germany, antitrust regulators recently announced an investigation of Google’s data-processing practices. The company has also been targeted by competition authorities in Britain, Australia, Turkey and Russia, among other jurisdictions.
In the United States, Google is battling a Justice Department lawsuit accusing the company of illegally protecting its dominance in online search and advertising. Authorities said Google unfairly paid for deals with companies like Apple to make Google the iPhone’s default search engine, and impeded competition by using exclusive contracts and agreements with customers. Parallel cases have been brought by attorneys general in dozens of states.
Ms. Vestager, who leads digital policy for the European Commission, is a familiar adversary for Google. The company has been charged with violating European Union antitrust laws three times in recent years, resulting in billions of dollars worth of fines.
In 2017, authorities fined Google 2.4 billion euros for unfairly using its dominance as a search engine to strengthen its online shopping service over rivals. A year later, the commission fined Google €4.34 billion for using its Android mobile operating system to require manufactures to install Google as the default search engine on smartphones.
And in 2019, Google was fined €1.5 billion for imposing unfair terms on companies using its search bar on their websites.
Google has filed appeals in all of the cases.