Alphabet company Google could face EU antitrust charges next year for its digital advertising business.
Google’s ad business generated $100 billion in sales last year and is its strongest moneymaker. It accounted for about 80% of Alphabet’s revenue, despite the firm having spent several years aggressively trying to push into selling hardware, subscription services, and cloud computing technology.
Google’s adtech business may be giving it an unfair advantage over other advertisers and competitors. European Commission launched an investigation into the matter in June last year.
Company A, which risks its fourth billion-euro fine, subsequently sought to settle the case but concessions were minor and very preliminary. Google has racked up more than 8 billion euros ($7.7 billion) in antitrust fines in the last decade.
Unfortunately, it’s difficult to predict the timing of charges being issued. They could be taken next year or they could need an additional six months.
Google has asked third parties to delete confidential details from their submissions, usually a precursor to allowing Google to access the documents following the receipt of a statement of objections.
It’s important for businesses to understand their legal options when faced with government investigations. Google could avert charges if it makes concessions. Some companies prefer to see the specifics of regulatory concerns before proposing solutions tailored specifically to these types of cases.
The Commission was not available for comment. Google, the world’s leading seller of online advertising, well ahead of Facebook and Instagram owner Meta Platforms Inc., had no immediate comment on this.
Let’s start with the model behind Google. In essence, they aren’t trying to make money through advertisements or licensing products, but through search traffic.
The lawsuit touches a nerve in Google’s advertising-driven business model, affecting advertisers, publishers, ad tech providers and end users.
Google has been responsible for some shady business practices and more transparency is finally on the way. “It’s been a long time coming – advertisers and publishers have been up in arms about Google’s ad-tech conduct for many years,” said Matthew Barby, Head of Value at Rubicon Project. They’re operating on multiple sides of the advertising transaction and giving both these parties a raw deal.
There have been a lot of questions about Google’s dominance in online advertising over the past few years. This has led to investigations from antitrust officials on five continents, who have questioned its practices.
Analysts expect Google to generate almost $233 billion in ad sales this year, and it’s already done so in the first half of the year. The company’s advertising business generated nearly $111 billion in sales through the first six months of 2018.
Google generates income through several different avenues, including selling ads on websites of outside partners and generating more revenue from YouTube, Gmail and other in-house services.