EU hits Google with adtech antitrust charges

google-eu

The European Commission said it has informed Google of its preliminary view that the company breached EU antitrust rules by distorting competition in the advertising technology industry or adtech.

The Commission said it takes issue with Google favouring its own online display advertising technology services to the detriment of competing providers of advertising technology services, advertisers and online publishers.

Google’s main source of revenue is online advertising: (i) it sells advertising space on its own websites and apps; and (ii) it intermediates between advertisers that want to place their ads online and publishers (i.e. third-party websites and apps) that can supply such space.

EU adtech ruling over Google

Advertisers and publishers rely on the adtech industry’s digital tools for the placement of real time ads not linked to a search query, such as banner ads in websites of newspapers (‘display ads’).

In particular, the adtech industry provides three digital tools: (i) publisher ad servers used by publishers to manage the advertising space on their websites and apps; (ii) ad buying tools used by advertisers to manage their automated advertising campaigns; and (iii) ad exchanges where publishers and advertisers meet in real time, typically via auctions, to buy and sell display adds.

Google provides several adtech services that intermediate between advertisers and publishers in order to display ads on web sites or mobile apps. It operates (i) two ad buying tools – “Google Ads” and “DV 360”; (ii) a publisher ad server, “DoubleClick For Publishers, or DFP”; and (iii) an ad exchange, “AdX”.

Statement of Objections on Google’s practices in adtech

The Commission preliminarily found that Google is dominant in the European Economic Area-wide markets: (i) for publisher ad servers with its service ‘DFP’; and (ii) for programmatic ad buying tools for the open web with its services ‘Google Ads’ and ‘DV360′.

The Commission preliminarily finds that, since at least 2014, Google abused its dominant positions by favouring its own ad exchange AdX in the ad selection auction run by its dominant publisher ad server DFP by, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.

It is also accused of favouring its ad exchange AdX in the way its ad buying tools Google Ads and DV360 place bids on ad exchanges. For example, Google Ads was avoiding competing ad exchanges and mainly placing bids on AdX, thus making it the most attractive ad exchange.

The Commission said it is concerned that Google’s allegedly intentional conducts aimed at giving AdX a competitive advantage and may have foreclosed rival ad exchanges.

This, it said, would have reinforced Google’s AdX central role in the adtech supply chain and Google’s ability to charge a high fee for its service.

If confirmed, those conducts would infringe Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’) that prohibits the abuse of a dominant market position.

The Commission preliminarily found that, in this particular case, a behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones.

Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends.

Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google.

“The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns” the Commission noted.

The sending of a Statement of Objections does not prejudge the outcome of an investigation.