Google is back in the crosshairs in the EU over an antitrust investigation into advertising

Author: Foo Yun Chee

BRUSSELS (Reuters) – Google was back in the EU antitrust spotlight on Tuesday as regulators launched an investigation into whether its digital advertising business gives the Alphabet unit an unfair advantage over rivals and advertisers.

The move by the EU competition enforcer marks a new front against Google and follows financial penalties of more than 8 billion euros ($9.5 billion) imposed over the past decade for blocking competitors from online shopping, Android smartphones and online advertising.

The European Commission said it would investigate whether Google is distorting competition by restricting third parties’ access to user data for advertising purposes on websites and apps, while reserving such data for its own use.

“We are concerned that Google has made it more difficult for rival online advertising services to compete in the so-called ad tech stack,” European Competition Commissioner Margrethe Vestager said in a statement.

Google generated $147 billion in online advertising revenue last year, more than any other company in the world, with search, YouTube and Gmail ads accounting for most of its overall sales and profits.

About 16% of its revenue came from the company’s display or network business, in which other media companies use Google technology to sell advertising on their websites and apps.

“We will also review Google’s user tracking policies to ensure they are consistent with fair competition principles,” Vestager added.

Google said it would cooperate constructively with the Commission.

“Thousands of European companies use our advertising products to reach new customers every day and finance their websites. They choose them because they are competitive and effective,” a Google spokesman said.

The commission said its investigation would cover Google services including Display & Video 360 (DV360) and Google Ads for buying online display ads on YouTube, Google Ad Manager, which publishers use to auction advertising space, and AdX, which is one of the few markets that can manage auctions.

Google’s plan to remove browser cookies and stop tracking Android users using a tool called advertising identifier will also be considered.

Just last week, Reuters reported that the EU’s competition enforcement authority would investigate Google’s digital advertising activities before the end of the year.

Google’s advertising business is also under fire in the United States, with the Justice Department, joined by some states, suing last year for abusing its dominant position in search advertising. A group of states, led by Texas, focused on anticompetitive behavior on the network’s side in a subsequent lawsuit.

A new EU investigation could end up targeting the entire Google advertising empire. According to market researcher eMarketer, Google could control 27% of global online advertising spending this year, including 57% for search ads and 10% for display ads.

While these numbers may not reflect a monopoly at first glance, advertisers and competitors argue that Google’s diverse software plays a role in so many aspects of the market that the company cannot be avoided.

(Reporting by Foo Yun Chee, additional reporting by Paresh Dave in San Francisco; editing by Louise Heavens and Alexander Smith)