Alphabet unit Google may face antitrust charges the coming year over its digital advertising business that might put the company at risk of its fourth fine in the European Union (EU) over a billion euros. The apprehension is looming as EU regulators are irritated with the slow pace of settlement talks with the company, people familiar with the matter said.
Despite attempts during the previous ten years to push into selling devices, subscription services, and cloud computing technology, Google’s advertising business still generates around 80% of Alphabet’s annual revenue. It profited over $100 billion in sales last year.
In June last year, the European Commission opened an investigation into Google’s adtech division as it was worried that the American tech giant would be gaining an unfair advantage over competitors and customers.
The corporation later tried to settle the lawsuit, but the concessions were small and only very tentatively accepted, one of the sources said. EU antitrust sanctions against Google have totaled more than $7.7 billion over the past ten years. One of the persons stated that although the timetable may yet alter, the EU competition enforcer is likely to issue the charges early in the following year.
According to one of the sources, the Commission has requested that third parties remove any personal information from their contributions. This is typically done before granting Google access to documents after receiving a statement of concerns.
By making more offers to resolve the probe, Google could be able to avoid the accusations. Before suggesting solutions suited to these issues, some businesses prefer to see the specific regulatory concerns.
A hit at the Google’s advertising business core
According to Dieter Paemen, a lawyer at the legal firm Clifford Chance who has previously counseled Google rivals in prior instances, the case strikes at the very core of Google’s advertising-driven business model, affecting advertisers, publishers, ad tech providers, and users alike.
“Advertisers and publishers have long been outraged by Google’s ad-tech practices, so this has been a long time coming. Google is acting in conflict of interest and treating both publishers and advertisers unfairly in the advertising transaction, ” he said.
Google’s advertising business dominance
Over the past few years, Google’s dominance in online advertising has come under growing scrutiny. Antitrust investigations into its operations have been conducted on five continents as a result of complaints from rivals about its alleged anti-competitive behavior.
Through the first half of the year, Google’s advertising division produced close to $111 billion in revenue. Refinitiv forecasts that analysts anticipate Google to generate $233 billion in ad revenue this year, an increase of around 11% from the previous year.
Although Google’s ad business has many different components, search advertising generates the most money. Selling advertisements on the websites and applications of third parties as well as on YouTube, Gmail, and other internal services are additional features.
