The European Union threatens to break up Google’s ad business

Ben Schoon | Jun 14 2023 - 8:34 am PT

Google’s dominance over the online ad market has been scrutinized time and time again, and this week the European Union is expressing its concerns that Google has breached the EU’s antitrust laws, and that the company should break up its ad business.

The EU today announced that it has informed Google of a “preliminary view” where the EU feels Google has breached antitrust rules in its ad tech. The root cause appears to be Google’s tendency to favor its own ads in its products, as well as deterring competitors.

This can be seen, the EU says, by looking at how Google handles its AdX ad exchange. On the publisher side, DFP (DoubleClick for Publishers) runs ad selection through AdX, while Google Ads and DV360 (Display & Video 360) provide buying tools for advertises that also running through AdX. This cuts out third-party ad exchanges entirely.

It’s further mentioned that a “behavioural remedy” won’t cut it in this case, and that Google should be required to break up its ad business through divestment. This would effectively put Google’s advertising products outside of Google itself.

The Commission preliminarily finds that, in this particular case, a behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones. Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends. Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google. The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns.

This preliminary view doesn’t necessarily match the outcome of an actual ruling against Google, but it certainly sets the tone for what might come.

Should Google be forced to break up its ad business outside of the company, it would deal an absolutely massive blow to the company. Google’s ad businesses account for a huge majority of the company’s revenue, nearly 80% as Reuters points out. Google’s ads touch many of its core products, such as Gmail, Maps, YouTube, and more.