The vast advertising business of Google has been targeted by the European Union as it has initiated an antitrust investigation into the search engine over allegations that the rival services have been put at a disadvantage by Google by making it harder for the rival brands to reach consumers as well as for publishers to fund their content.
The European Commission said on Tuesday that the question that it central to this formal investigation, which was initiated after a preliminary probe that had started in 2019, is whether Google is restricting access to user data for advertising purposes and thereby distorting competition in the market while keeping to itself such data for its gain.
“Google collects data to be used for targeted advertising purposes, it sells advertising space and also acts as an online advertising intermediary. So Google is present at almost all levels of the supply chain for online display advertising,” EU chief antitrust official Margrethe Vestager said in a statement. “We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack,” she added.
There would be constructive engagement of the company the European Commission “to answer their questions and demonstrate the benefits of our products to European businesses and consumers”, said a Google spokesperson.
There are already a number of antitrust cases filed against Google in the United States which includes one filed by the federal government in which the company has been alleged of operating an illegal monopoly in the markets for online search and search advertising.
About 80 per cent of the annual global revenues of the company come from advertising. The revenues of the company in Europe, Middle East and Africa was at $17 billion in the three months ended March 31 which makes this market the second most important ones for the company outside of its home market of the United States.
In 2019, the total display advertising spending in the European Union was valued at about €20 billion ($24 billion). Google and Facebook essentially dominate this business. EU regulators are already investigating Facebook for allegations about the manner in which the social media company uses data which allows the company to gain an unfair advantage in the business.
Earlier this month, a fine of €220 million ($270 million) was slapped on Google by France’s competition authority “for abusing its dominant position” in the market for online advertising which put rival platforms and publishers at a disadvantage.
According to the watchdog, charges of providing “preferential treatment” to Google Ad Manager, the ad management platform of Google for large publishers were brought against Google by the authority. This was done by the company by favoring its own online ad marketplace, AdX, which is a platform for publishers to sell space to advertisers in real time.
“A level playing field is of the essence for everyone in the supply chain,” said Vestager.
“Fair competition is important — both for advertisers to reach consumers on publishers’ sites and for publishers to sell their space to advertisers, to generate revenues and funding for content. We will also be looking at Google’s policies on user tracking to make sure they are in line with fair competition,” she added.
(Adapted from CNN.com)