Fri, December 03, 2021


E.U. opens antitrust investigation into Googles core moneymaker: Advertising

The European Union has launched an investigation to determine whether Google exerts too much control over the sprawling online marketing industry, in which advertisers can surveil, target and influence consumers through nearly any tech platform in which they engage.

The Silicon Valley company is present "at almost all levels of the supply chain for online display advertising," said Margrethe Vestager, an executive vice president of the European Commission and a longtime critic of Big Tech. Her investigation will focus on whether Google's many footholds in the video-advertising supply chain allow it to boost its own services and downgrade competing ones. The company's data collection tools, which hoover up vast quantities of user information, could give it an unfair advantage, she added.

Advertising technology encompasses a dizzying number of products and tools built by hundreds of companies. Some are used by Web publishers to sell ad space, while others are used by advertisers to buy it. In between sit levels of exchanges and advertising networks that connect the two. Although many companies compete at each level, Google dominates the landscape, selling tools for nearly every step.

Because the tech giant is also one of the largest sellers of online advertising space, it has been accused by competitors of using its heft in the industry to push people to buy its own ads over others.

The investigation announced Tuesday appears to focus on several of the company's video advertising products. Placing ads on Google-owned YouTube requires going through Google's ad-buying platform, essentially forcing advertisers to use the Google tool if they want access to the massive video site's 2 billion users.

The commission is interested in ways that this ad management tool creates restrictions against other ad-tech firms looking to reach customers through YouTube.

The commission wants to determine whether certain Google-designed virtual platforms are favoring the company's other products in such a way that shuts competitors out of the ad industry's virtual supply chain.

"We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack," Vestager said.

Google contends that its tech services fees are lower than reported industry averages and that most publishers use a range of advertising technologies.

"Thousands of European businesses use our advertising products to reach new customers and fund their websites every single day," a Google spokeswoman said in an email. "They choose them because they're competitive and effective."

The investigation comes just two weeks after the French government fined Google 220 million euros for abusing its position in the advertising tech market. The company agreed to change some of its tools so they plug in more easily with competitors' products, French authorities said.

In the United States, lawmakers have zeroed in on Google's advertising business, too. Politicians have likened the online advertising industry to the stock market, but where Google plays the role of both exchange and broker, allowing it to see the most favorable prices and prioritize its bids over those of others.

A 2020 lawsuit from the Texas attorney general also makes that claim and argues that Google's practices have pushed up the cost of advertising for businesses, therefore harming American consumers.

Dina Srinivasan, a Yale University fellow who also is a paid consultant in Texas's suit, said in a recent paper that Google's preeminence in the global advertising market is enabled by the government's lack of intervention. She wrote that the company "steers buy and sell orders" to its own businesses and "abuses access to inside information."

"In the market for electronically traded equities, we require exchanges to provide traders with fair access to data and speed, we identify and manage intermediary conflicts of interest, and we require trading disclosures to help police the market," Srinivasan wrote. "Because ads now trade on electronic trading venues too, should we borrow these three competition principles to protect the integrity of advertising?"

Google has called the Texas lawsuit "meritless" and is fighting it in court.

Tuesday's E.U. investigation is just the latest of several actions by Europe attempting to rein in Silicon Valley. A 2016 E.U. regulation forced companies to adhere to strict privacy requirements related to their collection and use of online data, forcing some companies to reshape their practices for fear of steep fines. And under Vestager's leadership, the European Commission has fined Google billions of dollars for its practices in several other markets.

The investigation announced Tuesday could also turn a critical eye toward how the company handles user data. In particular, several recent policies from the company have the effect of shutting off other firms' access to user data, while Google continues to leverage it for ad-targeting purposes. By collecting users' data and refusing to share it with competitors - which is increasingly the case for the company's browser-based ad-targeting and mobile products - Google may have a leg up compared to its competitors.

In Tuesday's announcement, Vestager said Google's presence throughout this virtual supply chain has prevented other companies from monetizing a lucrative industry.

"A level playing field is of the essence for everyone in the supply chain," she wrote. "Fair competition is important - both for advertisers to reach consumers on publishers' sites and for publishers to sell their space to advertisers, to generate revenues and funding for content."

Published : June 23, 2021

By : The Washington Post · Aaron Gregg, Gerrit De Vynck