Major tech upheaval continues as the EU orders Google to divest parts of its advertising business.
The announcement from Wednesday results from the accusations of the competition commission against monopolies.
The arrangement is similar to the recently proposed “AMERICA Law’ Bill in the United States.
The EU judgment explained
The EU Competition Commission said the problem is that “Google favors its own online display advertising technology services to the detriment of competing ad technology service providers, advertisers and online publishers”.
However, the regulator concluded that Google had abused its power by forcing a monopoly in the advertising business. The Commission believes this is done by prioritizing their ad exchanges in ad auctions.
In addition, the Commission believes that the only way to fight competition is to force Google to divest parts of its advertising business.
Margrethe Vestager commented on the verdict as follows:
Google is present at almost every level of the so-called ad tech supply chain. Our preliminary concern is that Google may have used its market position to favor its own brokerage services.
This potentially harmed not only Google’s competitors, but also the interests of publishers, while increasing advertisers’ costs.
The arrangement comes as no surprise, since the first investigations began two years ago.
Google responds to monopoly allegations
It is important to note that Google can react to the EU’s allegations and rulings.
In addition, Google can respond to the allegations, defend its position in writing and request an oral hearing to present its work.
Google Ads Vice President Dan Taylor publicly responded to the ruling:
Our advertising technology tools help websites and apps fund their content, enabling businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publisher and advertising 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 European Commission’s view and will respond accordingly.
How will the ruling affect advertisers?
There is no clear indication of the immediate impact the order will have on advertisers.
Since Google can react to the EU ruling, an official announcement of a forced sale is likely to be a long way off.
Payment media experts are following the verdict closely. Navah Hopkins commented on the verdict on LinkedIn:
Photo credit: LinkedIn.com, Navah Hopkins, June 2023There is speculation that years of experience with AI and machine learning could be lost or take a back seat as companies are forced to divest parts of their business.
The trickle-down effect could affect advertising performance immediately and in the long-term.
Summary
The EU judgment marks the beginning of a long journey for Big Tech. Not only for Google, but also for many other major ad tech platforms.
If passed in the EU, the ruling is likely to fuel the proposed AMERICA Act bill in the United States and encourage others to follow suit.
We will continue to update as more information becomes available.
Featured image: EtiAmmos/Shutterstock