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Report: Google to Challenge EU’s Attempt to Break Up Ad Business

Google reportedly intends to challenge the European Union’s (EU) threat to break up its ad business.

The tech giant has made it clear in a letter addressed to EU watchdogs that it will not accept the mandatory divestment of part of its services, and it plans to formally oppose the EU’s statement of objections before the end of the year, Bloomberg reported Thursday (Oct. 12), citing unnamed sources.

Reached by PYMNTS, a Google spokesperson pointed to a June blog post in which Dan Taylor, vice president, global ads at the company, addressed the European Commission’s (EC) statement of objections.

“The digital advertising market enjoys competitive pricing, lively innovation and robust competition — helping advertisers, publishers and consumers,” Taylor wrote in the post. “We look forward to showing how our ad tech tools help make the internet open, and accessible — and how breaking them would diminish the availability of free, ad-supported content that benefits everyone.”

The EU’s antitrust chief, Margrethe Vestager, has deemed the mandatory divestment of part of Google’s services as “the only way” to restore competition, according to the report.

The EU’s concerns revolve around Google’s alleged favoritism of its own ad exchange program, AdX, over its competitors, thereby strengthening its dominant position in the ad tech supply chain, the report said. The EU said in June that it believes that Google’s conduct has given AdX a competitive advantage, potentially foreclosing rival ad exchanges and undermining fair competition.

This case directly targets the black-box of online advertising, where Google automatically calculates and offers ad space and prices to advertisers and publishers as users click on webpages, per the report.

When announcing in June that a preliminary investigation suggests that Google abused its dominance in the online advertising space, Vestager said: “There is nothing wrong with being dominant as such. What our investigation has shown though, is that Google appears to have abused its market position.”

In a statement provided to PYMNTS at the time, Taylor said the EC investigation focuses on a “narrow aspect” of Google’s ad business.

“Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector,” Taylor said in the statement. “We disagree with the EC’s view and will respond accordingly.”

This is not the first time Google has faced scrutiny from the EU, according to the Bloomberg report. Vestager’s team has previously fined the tech giant a total of €8.3 billion ($8.8 billion) for abuses of its dominance in its mobile operating system and display advertising operations. Google is appealing all these fines.