Google’s Latest EU Antitrust Battle Goes to the Core of AdTech Business

The European Publishers Council (EPC), an association that includes leading press publishers like The New York Times, Germany’s Axel Springer and the U.K.’s Guardian, has filed today, Feb. 11, a complaint with the European Commission against Google asking the regulator to “restore conditions of effective competition in the AdTech value chain,” according to the Financial Times.

The European Commission has been inquiring about Google’s advertising practices since January 2021 when it sent questionnaires to publishers and advertising companies asking them about the role of Google as middleman in the AdTech value chain. 

This formal complaint from the EPC could provide fresh evidence that the EC may use to open a formal investigation against Google. U.S. regulators already accused Google in 2020 of abusing its monopoly and colluding with Meta (Facebook then) to shut out ad exchanges. 

Read more: Justice Department Said to Be Readying Google Antitrust Ad Tech Lawsuit 

However, what makes this potential investigation different is that it would likely aim at determining whether Google has abused its position by structuring auctions to its own benefits and by tying parts of its ad services in contracts to the detriment of publishers and advertisers.  

Prices in the AdTech chain aren´t very transparent, and it is difficult to know how much each intermediary of the chain charges for its services, but some reports suggest that around 40 to 60% of the money spent by advertisers is to pay fees — many of which go to Google. 

Google has built a strong position in most of the AdTech chain over the years, reaching 90-100% of the market share in Ad Servers, and maintaining over 50% of the market share in Supply-Side platforms and Demand-Side platforms. In essence, these are the main intermediary services between a publisher and an advertiser. One of the concerns raised by the EPC is that Google acts as a buyer, seller and intermediary in AdTech — so it has a conflict of interest.  

A report from the U.K. Competition and Markets Authority (CMA) in 2020 already determined that “Google’s strong position at each level of the intermediation value chain creates clear conflicts of interest, as it has the ability and incentive to exploit its position on both sides of a transaction to favor its own sources of supply and demand.”

The CMA concluded that “Google’s market power gives it the ability to exploit these conflicts by self-preferencing its own activities, and thereby further reinforcing its market power.” The CMA hasn’t opened an investigation yet, but the evidence it gathered will likely be taken into consideration by EU regulators before launching a formal probe.

This potential investigation comes at a time when the Digital Markets Act and the Digital Services Act could be approved by the 27 member states before summer, although they won´t enter into force until the end of the year or beginning of 2023. These new regulations will ban Google from engaging in self-favoring practices or tying some services. However, a formal antitrust investigation would enable the EC not only to get more information on the AdTech chain, but also to impose far-reaching remedies like a divestiture of part of the AdTech business, if needed. 

Unlike previous investigations where Google paid over $9 billion in fines but the remedies adopted by regulators didn’t affect Google’s business, any significant remedy in the AdTech market could affect Google’s advertising core business.

Read More: German Antitrust Watchdog Takes New Step To Regulate Google 

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