European Commission sends Statement of Objections to Google over abusive practices in online advertising technology

June 23, 2023

The European Commission has informed Google that it believes that it has breached EU antitrust rules by distorting competition in the advertising technology industry (“adtech”). The Commission believes that Google favours its own online display advertising technology services to the detriment of competing providers of advertising technology services, advertisers and online publishers.

Google’s main source of revenue is online advertising. It sells advertising space on its own websites and apps, it intermediates between advertisers that want to place their ads online and publishers (i.e. third-party websites and apps) that can supply such space.

Advertisers and publishers rely on the adtech industry’s digital tools for the placement of real time ads not linked to a search query, such as banner ads in websites of newspapers. Google provides several adtech services that intermediate between advertisers and publishers to display ads on web sites or mobile apps. It operators two ad buying tools – “Google Ads” and “DV360”; a publisher ad server, “DoubleClick For Publishers, or DFP”; and an ad exchange, “AdX”.

Statement of Objections on Google’s practices in adtech

The Commission’s preliminary finding is that Google is dominant in the EEA-wide markets for:

  • publisher ad servers with its service ‘DFP’; and
  • programmatic ad buying tools for the open web with its services ‘Google Ads’ and ‘DV360’.

The Commission’s preliminary finding is that since at least 2014, Google abused its dominant positions by:

  • Favouring its own ad exchange AdX in the ad selection run by its dominant publisher ad server DFP, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.
  • Favouring its ad exchange AdX in the way its ad buying tools Google Ads and DV360 place bids on ad exchanges. For example, Google Ads was avoiding competing ad exchanges and mainly placing bids on AdX, this making it the most attractive ad exchange.

The Commission is concerned that Google’s allegedly intentional conducts aimed at giving AdX a competitive advantage and may have foreclosed rival ad exchanges. This would have reinforced Google’s AdX central role in the adtech supply chain and Google’s ability to charge a high fee for its service.

If confirmed, these practices would infringe Article 102 fo the Treaty on the Functioning of the European Union that prohibits the abuse of a dominant market position.

In addition, the Commission finds that, in this case, a behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-referencing conducts or engages in new ones. Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends. Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google. As a result, the Commission’s preliminary view is that only the mandatory divestment by Google of part of its services would address its competition concerns.

The sending of a Statement of Objections does not prejudge the outcome of an investigation. Google will now respond to the Commission’s concerns.

The CMA has also been investigating Google’s adtech arrangements.