Big tech shakeups continue as the EU orders Google to divest parts of its advertising business.
The Wednesday announcement results from the competition commission’s accusations against monopolies.
The order comes similar to the recently proposed ‘AMERICA Act’ bill in the United States.
The EU Ruling Explained
The EU competition commission stated the issue lies “with Google favouring its own online display advertising technology services to the detriment of competing providers of advertising technology services, advertisers and online publishers.”
But, the regulator concluded Google had abused its power by forcing a monopoly in the advertising business. The commission believes that by favoring its ad exchange in ad auctions.
Further, the commission believes the only solution to address competition is to force Google to divest parts of its ad business.
As part of the ruling, Margrethe Vestager made the following statement:
Google is present at almost all levels of the so-called ad tech supply chain. Our preliminary concern is that Google may have used its market position to favour its own intermediation services.
Not only did this possibly harm Google’s competitors but also publishers’ interests, while also increasing advertisers’ costs.
The order does not come as a surprise, as the initial investigation started two years ago.
Google Responds To Monopoly Allegations
It’s important to note that Google can respond to the EU’s allegations and ruling.
Further, Google can respond to the accusations, defend its position in writing, and request an oral hearing to present its work.
Vice President of Google Ads, Dan Taylor, publicly responded to the ruling:
Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector. 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.
How Will The Ruling Impact Advertisers?
There isn’t a clear indicator of the immediate impact the order will have on advertisers.
Because Google can respond to the EU ruling, an official declaration of a forced sell-off may still be a ways off.
Paid media experts are following the ruling closely. Navah Hopkins commented on the verdict on LinkedIn:
Image credit: LinkedIn.com, Navah Hopkins, June 2023It’s speculated that years of AI and machine learning could be lost or deprioritized if companies are forced to divest portions of their business.
The trickle-down effect could hurt advertising performance in the immediate and long term.
Summary
The EU ruling begins a long road ahead for big tech. Not just for Google but many other large ad tech platforms.
If the ruling passes in the EU, it’s likely to add fuel to the proposed AMERICA Act bill in the United States and encourage others to follow suit.
We’ll continue to update as more information becomes available.
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