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EU Opens Investigation Into Google's Ad Tech Business

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Google’s antitrust woes in Europe aren’t over yet. The company has been slapped with billions of dollars in fines in the past for its unfair and anti-competitive business practices. There are also multiple ongoing investigations into the search giant’s business practices in several European countries. Now, the European Commission has opened a formal investigation into the company as well.

The new investigation will look into whether Google favors its own online display advertising technology services over competitors, thus violating the European Union (EU) competition rules, the EU announced earlier this week. The European watchdog will also examine whether the search giant willfully deprived competitors access to user data for advertising purposes.

“Google collects data to be used for targeted advertising purposes, it sells advertising space and also acts as an online advertising intermediary. So Google is present at almost all levels of the supply chain for online display advertising,” said Margrethe Vestager, Executive Vice President of the European Commission. “We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.”

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The European Commission’s investigation will examine a number of online advertising-related services that Google operates. These include requiring advertisers to use the company’s own Ad Manager to show ads on YouTube. It will also explore how Google’s recently-announced plans to phase out third-party cookies on Chrome will affect online advertising.

Last but not least, the European Commission will examine whether Google is illegally tracking people who use its various platforms. We will also be looking at Google’s policies on user tracking to make sure they are in line with fair competition,” Vestager added.

Google’s ad tech business attracts formal investigation in Europe

This is the first time the European Commission has opened a formal investigation into Google’s ad tech business. The previous ones focused on shopping search ads and mobile phone ads. However, it’s an important one as online advertising is one of the company’s core businesses.

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A bulk of its revenues comes from selling advertising spaces on web pages and apps. Online advertising spending reached €20 billion in the EU in 2019. Google acts as an intermediary between advertisers and publishers in this space.

If found guilty, Google may be required to “separate from or restrict its online ads operations”. So this investigation has the potential to significantly impact the company’s revenue streams. Google reportedly generated $147 billion in revenue from the ad tech business last year.

Google is already facing multiple similar investigations in several parts of the world, including the US. The French watchdog recently fined the company $267 million (€220 million) for manipulating the ad marketplace. Germany and China are also investigating the search giant’s various business practices.

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Google, meanwhile, says its services are “competitive and effective” for businesses in Europe. The company vows to “engage constructively with the European Commission” in this investigation. It will now be interesting to see where this investigation leads to.