EU suggests breaking up Google’s ad business in preliminary antitrust ruling

The European Commission has made a formal antitrust complaint against Google and its ad business, saying that its preliminary view is that “only the mandatory divestment by Google of part of its services would address its competition concerns.” It’s a significant move targeting the main source of the search giant’s revenue.

“Our preliminary concern is that Google may have used its market position to favor its own intermediation services,” the Commission’s executive vice-president in charge of competition policy Margrethe Vestager said in a statement.

The statement of objections issued today is an important step in the EU’s investigation. Google will now have the opportunity to reply in writing and request a hearing, after which the Commission will decide whether Google has broken antitrust law in the bloc. If found guilty, the EU’s competition regulator can fine Google up to 10 percent of its global sales and (perhaps more significantly) force it to change the way it operates.

It’s a significant charge against what remains a core source of Google’s revenue. Although the Alphabet-owned company is known as a provider of everything from search and OSes to thermostats, it’s advertising that provides the majority of its income. Bloomberg, which earlier reported on today’s complaint, noted that Google’s advertising business brought in around $225 billion for the company in 2022, representing around 80 percent of its annual revenue.

The European Union’s investigation into Google’s advertising technology dates back to 2021, when it said it was investigating whether Google unfairly favors its own services over competitors and limits their access to user data. At the time, the Commission’s digital czar, Margrethe Vestager, noted that “Google is present at almost all levels of the supply chain for online display advertising” and said that the EU is “concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.”