The EU is threatening Google to break up its ad business

The EU has just issued a "preliminary view" that says Google has abused its position in the digital advertising market and that a divestiture of its ad business might be the only solution.

A press release by the European Commission details their concerns but the gist of it is that it feels Google is abusing its dominance in both the buy and sell sides of advertising and forcing publishers and advertisers to do business through Google's own ad exchange. 

Margrethe Vestager, the Commission's executive vice-president of competition policy, told reporters in a Q&A that:

Google is in every part of this value chain. As we see it they hold a dominant position in both the sell side and the buy side in order to favor their own ad exchange. We don’t see that this inherent and in-built conflict of interest can be solved in other ways... When you look at the web as such you see Google having a presence that is unrivaled by anyone else.

Dan Taylor, Google's VP of global ads, disagrees and called the digital advertising space a "highly competitive sector." He said:

Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. 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.

Forcing Google to divest its ad business would be a huge blow to the company. According to reports, the ad business raked in about US$225 billion in revenue last year, which is around 80% of Google's annual revenue.

That said, this is only a preliminary view and it does not prejudge the outcome of the investigation. The EU will issue the final outcome after a hearing.

Source: European Commission, The Verge

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