EU antitrust officials are investigating Google’s vast ad business

(CNN Business) – The European Union has launched an antitrust investigation into the vast advertising business of Google, claiming that the company may have rival services at a disadvantage, making it difficult for brands to reach consumers and for publishers to fund their content.

The formal investigation, which follows a preliminary investigation that began in 2019will examine whether Google is distorting competition by restricting access to user data for advertising purposes, while reserving such data for its own use, the European Commission said on Tuesday.

“Google collects data to use it for specific advertising purposes, sells advertising space and also acts as an online advertising intermediary. Google is therefore present at almost every level of the online display advertising supply chain, ”said EU Antitrust Director Margrethe Vestager. in a statement.

“We are concerned that Google has made it difficult for rival online advertising services to compete in the so-called ad tech stack.”

Google is willing to collaborate

A Google spokesperson said the company would work constructively with the European Commission “to answer their questions and demonstrate the benefits of our products to European businesses and consumers.”

Google already faces several antitrust cases in the United States, including one initiated by the federal government, accusing the company of operating an illegal monopoly in the online search and search advertising markets.

The company generates about 80% of its revenue from advertising. In the three months ending March 31, Google’s revenue in Europe, the Middle East and Africa totaled $ 17 billion, making it the second most important region for the company after America.

Total display advertising spending in the European Union amounted to around € 20 billion (US $ 24 billion) in 2019. It is a business dominated by Google and Facebook, which is already investigated by EU regulators by the claims that your use of data gives you an unfair advantage.

France’s competition authority fined Google 220 million euros (US $ 270 million) earlier this month “for abusing its dominant position” in the online advertising market to the detriment of rival platforms and publishers.

The authority accused Google of giving “preferential treatment” to Google Ad Manager, its ad management platform for large publishers. It did so by favoring its own online advertising marketplace, AdX, where publishers sell space to advertisers in real time, according to the watchdog.

Changing your business

As part of the agreement with the French authorities, Google undertook to make it easier for publishers in France to use its data and tools with other advertising technologies. “We will test and develop these changes over the next several months before implementing them more widely, including some globally,” the company said in a statement on June 7.

Google provides various ad technology services that mediate between advertisers and publishers to display ads on websites or mobile applications. The EU investigation will focus on a number of areas of concern, including the obligation to use their services to buy or post ads on Google or YouTube.

“A level playing field is essential 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 revenue and funding for content. We will also review Google’s policies on user tracking to make sure they are in line with fair competition, “he added.

According to Google, competition in online advertising has made ads more affordable, lowered ad technology fees, and created more options for publishers and advertisers. The company also says that publishers keep around 70% of the revenue when they use its products and that the largest advertisers use four or more platforms to buy ads.

– Rob North, Eoin McSweeney, and Hanna Ziady contributed to this article.