EU orders Google to sell part of its advertising business for inhibiting competition

The European Union’s antitrust regulator set its sights on Google’s lucrative digital advertising business in an unprecedented decision after it ordered the tech giant on Wednesday to sell part of it to address concerns that it inhibits competition.

The European Commission said its preliminary view following an investigation is that “only mandatory divestment by Google of part of its services” would satisfy those concerns.

The EU has led the global movement to put limits on big tech companies-including groundbreaking rules on Artificial Intelligence-but until now had resorted to imposing million-dollar fines, including three antitrust penalties on Google valued at billions of euros (dollars).

This is the first time the 27-nation bloc has ordered a tech giant to dismantle a key part of its business.

Google can defend itself by presenting its arguments before the EU’s executive arm, the guarantor of antitrust enforcement, issues its final decision.

“Our ad tech tools help websites and apps fund their content and enable businesses of all sizes to reach new customers,” said Dan Taylor, Google’s vice president for global advertising. “Google remains committed to creating value for our publisher and advertising partners in this highly competitive industry.”

The commission’s decision stems from a formal investigation opened in June 2021 into whether Google had violated EU competition rules by favoring its own online ad tech services at the expense of rival publishers, advertisers and ad tech services.

European Commission Vice President Margrethe Vestager alleges that Google dominates both aspects of the advertising sales market. Google abused that position by favoring its own advertising business, which strengthened its ability to charge high rates for its services, the commission said.

“Google represents the interests of both buyers and sellers. Additionally, at the same time, Google determines the rules for the matching of demand and supply,” Vestager said at a press conference. “That gives rise to inherent and pervasive conflicts of interest.”

YouTube was one of the targets of the investigation, which sought to determine whether Google used the video publishing site’s dominant position to favor its own ad-buying services by imposing restrictions on rivals.

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