The European Commission has informed Google it could face penalties for breaking antitrust laws, including mandatory divestment of some of its services. Margrethe Vestager, executive vice president in charge of competition policy, said Google may have illegally used its market position to favor its own intermediation services. Photo by Aris Oikonomou/EPA
June 14 (UPI) -- The European Commission has told Google it could face mandatory divestment of part of its services in Europe for using market dominance to break EU antitrust laws. The commission said Google is using its market dominance to favor its own advertising exchanges.
The European Commission statement said that it, "preliminarily finds that, since at least 2014, Google abused its dominant position under EU law."
"The Commission's preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns," the European Commission statement said.
"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," the European Commission said. "Furthermore, it operates the largest ad exchange. This leads to a situation of inherent conflicts of interest for Google."
Article 102 of the Treaty on Functioning of the European Union bans the abuse of a dominant market position. So the European Commission has opened formal proceedings into possible anticompetitive conduct by Google, citing Article 102.
Informing the company through a Statement of Objections that it may be violating EU antitrust laws is a formal step in investigations into the suspected violations.
According to Article 102, "Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States."
The preliminary findings allege that Google is doing this through favoring its own ad exchange AdX in the ad selection auction run by Google's dominant publisher as server DFP.
Google Ads, according to the commission, was avoiding competing ad exchanges by allegedly putting its thumb on the digital advertising scale by favoring its own ad exchange. And that, according to preliminary commission findings, violates EU antitrust laws.
"Google has a very strong market position in the online advertising technology sector. It collects users' data, it sells advertising space, and it acts as an online advertising intermediary," Margrethe Vestager, commission executive vice president in charge of competition policy, said in a statement.
"Our preliminary concern is that Google may have used its market position to favor its own intermediation services. Not only did this possibly harm Google's competitors but also publishers' interests, while also increasing advertisers' costs. If confirmed, Google's practices would be illegal under our competition rules."
If the investigation by the commission concludes that there's sufficient evidence of Google antitrust violations, it can "adopt a decision prohibiting the conduct and imposing a fine of up to 10% of the company's annual worldwide turnover."
To end the antitrust behavior, the commission may impose behavioral or structural remedies on Google that could include forcing Google to divest part of its business in Europe.
In November 2021, the EU General Court upheld a $2.8 billion fine against Google for unfairly directing its users to its shopping site.
In December 2022, Amazon reached an antitrust investigation settlement with the EU that gives foreign merchants added access to sell items on Amazon's website. Amazon avoided millions of dollars in fines.