The European Union has launched an antitrust investigation into Google’s vast advertising business, claiming that the company may have disadvantaged rival services, making it harder for brands to reach consumers and for publishers to fund their content.
The formal investigation, which follows a preliminary probe that began in 2019, will examine whether Google (GOOGL) is distorting competition by restricting access to user data for advertising purposes, while reserving such data for its own use, the European Commission said on Tuesday. “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,” EU chief antitrust official Margrethe Vestager said in a statement. “We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack.”
A Google spokesperson said that the company would engage constructively with the European Commission “to answer their questions and demonstrate the benefits of our products to European businesses and consumers.” Google is already facing several antitrust cases in the United States, including one brought by the federal government, which accuses the company of operating an illegal monopoly in the markets for online search and search advertising. The company generates about 80% of its revenue from advertising. In the three months ended March 31, Google’s revenues in Europe, Middle East and Africa totaled $17 billion, making it the second most important region to the company after the Americas. Total display advertising spending in the European Union was worth about €20 billion ($24 billion) in 2019. It’s a business dominated by Google and Facebook (FB), which is already being investigated by EU regulators over claims that its use of data gives it an unfair advantage.