Google has been accused of favouring its own online advertising options over other companies.
Tech giant Google, on Wednesday, faced accusations of violating European Union antitrust laws. The company was charged with exploiting its dominant position in online advertising to undermine competitors.
Google was charged by the European Commission, which is the executive arm of the 27-member European Union. Prior to this, there have been four separate fourth instances in which the company has been accused of violating European antitrust laws in recent years.
While significant, this is not the first legal case against the internet behemoth's fundamental business model that has come under the lens of various countries.
What is the issue?
One of the biggest names in the tech world, Google generates revenue by means of online advertising. It does so by operating as a seller of digital ads on its platforms. It also works as an intermediary between advertisers and websites and apps where they can display their ads.
As part of the advertising practice, digital tools are employed by stakeholders to place ads on various online platforms. In order to do so, Google offers its own set of tools to assist in this process. That's not all – Google operates an ad exchange platform that enables the buying and selling of ads.
What does the EU say?
In this context, the European Union regulators have accused Google of displaying favouritism towards its own ad exchange, AdX. According to EU rules that prohibit the abuse of a dominant market position, Google's involvement on both the supply and demand sides of digital advertising creates inherent conflicts of interest.
“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 EU has declared.
Throwing light on the issue, Margrethe Vestager, the EU's executive vice president in charge of competition policy, said in a statement, “Google has a very strong market position in the online advertising technology sector. It collects users' data, it sells advertising space, and it acts as an online advertising intermediary," said
"Our preliminary concern is that Google may have used its market position to favour its own intermediation services. Not only did this possibly harm Google's competitors but also publishers' interests, while also increasing advertisers' cost, Vestager explained, adding that “if confirmed, Google's practices would be illegal” under EU's competition rules.
Previously, the tech Giant has been accused of the same monopolising behaviour by the U.S. Justice Department as well as Britain. As part of the charges levelled against Google by Britain, the country's antitrust authority has also been investigating Google's advertising actions and policies.
What does Google have to say?
Google has categorically refused to agree with the EU's observation. In a statement provided to Euronews, Dan Taylor, vice president of global ads for Google, explained that Google "remains committed to creating value for our publisher and advertiser partners in this highly competitive sector….The advertising technology tools help websites and apps fund their content and enable businesses of all sizes to effectively reach new customers.” Taylor also added, “The Commission's investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC's view and we will respond accordingly.”
Now, it is all eyes on the EU to see where the future of the tech Giant is headed in that part of the world.