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Google seems to have escaped the US government’s search-antitrust lawsuit with a surprisingly light punishment, but its display-ads business looks in more legal trouble than ever after taking two hits from opposite sides of the Atlantic on Friday.
First, the European Commission hit Google with a €2.95 billion fine and said that this penalty was only part of stopping Google’s abuses of power in the market for ads shown on web pages.
“As a result of Google’s illegal practices, advertisers faced higher marketing costs, which they likely passed on to European consumers in the form of higher prices for products and services,” EC executive vice president Teresa Ribera said in a statement on Friday. “Google’s tactics also reduced revenues for publishers, which may have led to lower service quality and higher subscription costs for consumers.”
Ribera noted that this fine was increased because Google broke EU antitrust rules three times before in cases that each resulted in a penalty of one billion euros or more. The EC fined Google €2.42 billion in 2017 for favoring its own comparison shopping service, €4.34 billion in 2018 for using its control of Android to favor its own search engine, and €1.49 billion in 2019 for suppressing competitors in online search advertising.
In June 2023, the EC found Google guilty of abusing its power in both the publisher and advertiser sides of the display-ads market and suggested that only a forced divestiture of some of its business units would end that threat.
Ribera picked up on that, writing that “a mere fine in this case is not enough to deliver real and tangible solutions for the market and to protect our consumers.” The EC has given Google 60 days to come up with a plan to end its illegal conduct and its “inherent conflicts of interest.” That will probably have to involve selling off some of its display-ads businesses.
Wrote Ribera: “At this stage, it appears that the only way for Google to end its conflict of interest effectively is with a structural remedy, such as selling some part of its Adtech business.”
‘Google Must Promptly and Fully Divest’
Later Friday, the Department of Justice filed its own proposal to force a breakup of Google’s display-ads business. That came after an April ruling from Judge Leonie Brinkema for the US District Court for the Eastern District of Virginia, which said “Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising.”
The 61-page “Proposed Final Judgment” lays out a plan to terminate Google’s illegal practices, restore competition, ensure that it can’t resume those practices, and even claw back some of the profits that resulted from these practices.
Step one would be a forced sale of AdX, the ad exchange that Brinkema said holds more than half of the market for the near-real-time auctions among advertisers that generate bids for spaces on web pages—one side of the programmatic advertising system that fuels advertising on most sites, this one included.
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“Google must promptly and fully divest AdX, to a buyer approved in writing by the Plaintiffs in their sole discretion (the AdX Acquirer), subject to terms that the Court and Plaintiffs approve,” according to the proposal, which also says Google could not return to the ad-exchange market for five years.
Google could keep its business at the other side of the programmatic industry, publisher ad servers that alert advertisers of space available on sites–where Google holds about 90% of that market. But it would have to publish the auction logic behind the product formerly called DoubleClick for Publishers (DFP) under an open-source license for use in auctions to be run by “a neutral, third-party” administrator.
The proposal reserves the right to force a divestiture of the rest of DFP if necessary to open this market. (Google retired the AdX and DFP names and now brands its entire display-ads tech stack as Google Ad Manager.)
The DOJ proposal further requires Google to refrain from certain self-dealing practices and implement data-portability and interoperability measures to ease competition in the display-ads business. And it requires the company to hand over 50% of the profits generated by AdX and DFP, until the sale of either.
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Those funds would be used to cover the costs of running those open-source auctions, defray publishers’ costs of switching from DFP to competing publisher ad servers, or “for any other remedial purpose ordered by the Court.”
‘An Unjustified Fine’
Google objected to both the EC and DOJ actions.
“The European Commission’s decision about our ad tech services is wrong and we will appeal,” Lee-Anne Mulholland, VP and global head of regulatory affairs, said in a post on Friday. “It imposes an unjustified fine and requires changes that will hurt thousands of European businesses by making it harder for them to make money.”
In May, Google had proposed its own set of remedies that would not see ad units sold off but would instead “make it even easier for publishers to use Google Ad Manager with other ad tech providers, while minimizing disruption.”
A trade association representing news publishers—who have complained about Google keeping so much of the money made by display ads and have grown uneasy over how Google’s “AI Overview” search results seem to be reducing click-throughs to sites—endorsed forcing Google out of parts of that industry in a statement reacting to the EC fine.
“Google must be held accountable for decades of abuse of its market power,” Danielle Coffey, president and CEO of the News/Media Alliance, said in the statement, which nodded to Republican complaints of unfair content moderation by large online platforms. “Google’s monopolistic tactics in the advertising market have starved content creators of revenue, forced users to pay higher prices, and silenced too many Americans.”
About Rob Pegoraro
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