Google has expressed its determination to fight against the European Union's threat to break up its ad business, setting the stage for a potential antitrust battle that could rival its ongoing clash with the US Justice Department and state attorneys general.
In a recent letter addressed to EU watchdogs, Google firmly stated that it will not accept the mandatory divestment of certain services as deemed necessary by Margrethe Vestager, the EU's antitrust chief. Vestager believes this divestment is the only way to restore fair competition in the market. Google is planning to formally oppose the EU's statement of objections before the year's end, according to an anonymous source familiar with the contents of the letter.
This move by Google could ignite years of legal disputes with EU regulators. The European Union accused Google of favoring its own ad exchange program over its competitors, thereby strengthening its dominant position in the ad tech supply chain. The EU's concerns stem from the belief that Google's alleged deliberate conduct within the adtech supply chain has given its own exchange, AdX, an unfair competitive advantage, resulting in potential harm to rival ad exchanges and the overall fairness of competition within the market.
The EU's case is a direct challenge to the black-box nature of online advertising, where Google automatically calculates and offers ad space and prices to advertisers and publishers as users click on web pages.
The European Commission declined to comment on the matter, while Google's spokesperson referred back to a previous blog post where the company argued that the EU's complaint fails to recognize the benefits that advanced advertising technology brings to merchants for reaching customers and growing their businesses.
Since the EU's complaint, Margrethe Vestager has temporarily left her position in the European Commission to pursue the role of president of the European Investment Bank.
A statement of objections outlines the EU's findings and typically serves as a precursor for imposing fines or requiring companies to modify their business practices. Companies subject to such filings can contest them through written submissions or oral hearings. Once the EU reaches a final decision, companies have the right to challenge the regulator through legal action.
Google has been under scrutiny from the EU for several years. Vestager's team has imposed fines totaling €8.3 billion ($8.8 billion) on Google, including penalties for abuse of its dominance in the mobile operating system and display advertising sectors. Google has appealed these decisions.
While this ongoing battle with the EU remains significant, it is somewhat overshadowed by Google's current legal dispute in the United States. The US Justice Department and state attorneys general are also suing Google, and this lawsuit could potentially result in the breakup of the tech giant, which has been in operation for 25 years.
The US case primarily focuses on agreements between Google and other companies that make Google the default search engine in browsers and mobile devices, thereby giving it a clear advantage in the market.