Google ‘Faces Formal EU Probe’ Into Advertising Business

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Image credit: European Commission

European Union antitrust regulator reportedly preparing formal investigation into Google’s online advertising business by end of year

Google may reportedly face a formal European Union investigation into its digital advertising business before the end of the year, adding to pressure from multiple existing regulatory actions into its ad business in the US.

The action would also mark a departure from previous EU investigations, which have resulted in 8 billion euros (£7bn) in fines for misusing its dominant position to unfairly pressure rivals in online shopping, Android smartphones and online advertising.

The new investigation would focus on Google’s position with regard to advertisers, publishers, intermediaries and competitors, Reuters reported, citing unnamed sources.

The scope of such a probe would be broader than that of the a case brought by the French antitrust agency, which was settled earlier this month.

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Google is a dominant player in online advertising, with $147bn (£107bn) in revenues from the market last year, more than any other company.

The bulk of those revenues are derived from ad sales on its own properties, such as search, YouTube or Gmail.

About 16 percent of revenues derived from Google’s display or network business, where third parties use Google’s technology to sell ads on their websites or apps.

A new EU probe could target both businesses. The EU has existing investigations into Google’s local search and job search offerings.

Advertisers and rivals say Google takes advantage of the dependence buyers, sellers and intermediaries have on it to charge high fees and block fair competition.

International pressure

The two sides of Google’s ad business were also targeted by parallel US regulatory actions last year.

The US Justice Department, along with some states, sued Google last October for abusing its dominance in search advertising.

In December 10 US states, led by Texas, sued Google over anti-competitive behaviour in its network advertising operations, including alleged collusion with Facebook.

France earlier this month settled with Google for $268m and various commitments over allegations related to the network ad business.

Google also agreed earlier this month to work with the UK competition regulator, the Competition and Markets Authority, on a plan to eliminate cookies from its Chrome browser.

The agreement followed a probe launched by the CMA in January.

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