Recently, the European Union (EU) moved to formalize its request for Google to mandatorily sell its Ad-tech tools. U.S. regulators have recently started similar actions to require Google’s U.S. business to do the same, now making this a trans-Atlantic and inter-governmental push to break up Google’s Ad-tech operations.
Google offers customers, a one-stop-shop for online Search Engine Optimization (SEO) advertising, while linking potential customers to goods and services. By breaking up the supply chain, governments will arbitrarily increase compliance costs for both Google and its customers while also passing complicated advertising transparency laws further exacerbating the burden on individual companies.
The EU has failed to consider the impacts on the consumer and its effects on efficiency, predictability, and market innovation for years to come. By breaking the supply chain up, the EU will effectively require each customer to purchase the services of individual brokers along multiple stages of the ‘ad-buy’ process, increasing the number of service subscriptions and fees, in addition to lengthening the administrative burden on companies to action purchases.
The EU complaint alleges that Google distorted the market in the Ad-tech industry, intentionally made competitor Ad-tech exchanges uncompetitive, and that “behavioral” remedies are unlikely to solve this problem. Google is likely to contest this preliminary finding, by submitting a formal request for a public hearing before representatives of the EU commission as well as representatives of national competition authorities. If Google’s appeal fails and representatives conclude that they have indeed fallen foul of EU anti-competition law, Google could be fined up to 10% of its world-wide turnover, which amount to €2.42 billion or US$2.7 billion. The EU is also not required to conclude this matter in a specific time frame, nor does it have any requirement to specifically allow Google to defend its position in any higher court.
The EU may also impose on Google the requirement for any behavioral or structural “adjustments” it deems necessary to remedy the infringement. As the Commission has already stated that it has determined that behavioral remedies will unlikely fix their complaint, structural changes are likely. The EU has recently made similar pushes to limit the power of other large U.S. Technology companies. While this may be worrying to those in the EU, many in the current U.S. administration have also wanted to limit Google’s operations in what can only be described as a bizarre ideological and narrow-minded approach to antitrust enforcement.
Google’s Vice President of Global Ads, Dan Taylor, wrote in a post that these “claims that are not new and relate to a narrow part of our advertising business.” Further adding, “It fails to recognize how advanced advertising technology helps merchants reach customers and grow their businesses — while lowering costs and expanding choices for consumers.”
Despite Mr. Taylor’s endearing tone, many experts in the EU market have already conceded Google’s case to the ash heap of regulatory history. Citing Google’s apparent lack of concessions to the EU as evidence that Google is unwilling to cede ground to growing antitrust actions taken by ideologues across the globe.
Should the EU persist in requiring Google to sell its Ad-tech tools, they will fail the consumers of online Ad technology in the EU and limit growth in the local industry for years to come. Inevitably, this will also serve as a precedent for other governments, including the U.S., to cite in their similar pursuits here at home. Failing to recognize the constantly evolving and fiercely competitive nature of technology such as Ad-tech tools, will ultimately fail those who choose to use online advertising for their business. This is one misstep U.S. regulators and policymakers should avoid.
