Google (GOOGL.O) may have to sell a portion of its profitable adtech business to address anti-competitive concerns, EU regulators said on Wednesday, threatening the corporation with its toughest regulatory penalty to far.

The European Commission laid out its claims against Google in a statement of objections two years after initiating an inquiry into practices such as favoring its own advertising services, which may result in a punishment of up to 10% of Google’s annual global turnover.

The stakes are higher for Google in this new battle with authorities since it involves the company’s greatest revenue generator, with adtech accounting for 79% of total revenue last year.

Its advertising income in 2022, comprising search services, Gmail, Google Play, Google Maps, YouTube advertisements, Google Ad Manager, AdMob, and AdSense, was $224.5 billion.

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According to EU antitrust chief Margrethe Vestager, Google may have to sell a portion of its adtech business because a behavioral remedy is unlikely to curb the anticompetitive activities.

“For example, Google could sell off its sell-side tools, DFP and AdX.” “By doing so, we would eliminate conflicts of interest,” she said at a press conference.

“Of course, this is a strong statement, but it reflects the nature of markets, how they work, and why a behavioral commitment seemed out of the question.”

Google stated that it does not agree with the Commission’s charge.

“The Commission’s investigation is not new, but it focuses on a narrow aspect of our advertising business.” “We disagree with the EC’s assessment,” said Dan Taylor, Google’s vice president of worldwide advertising, in a statement.

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Vestager stated that investigations into Google’s implementation of a privacy sandbox set of tools to restrict third-party cookies on its Chrome browser, as well as its decision to stop making the advertising identification visible to third parties on Android smartphones, would continue.

She stated that the EU had worked closely with competition authorities in the United States and the United Kingdom.

The accusation was welcomed by the European Publishers Council, who lodged a complaint with the Commission last year.

According to the Commission, Google favors its own online display advertising technology services over other advertising technology providers, advertisers, and online publishers.

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It claimed that Google had exploited its power since 2014 by favoring its own ad exchange AdX in the ad selection auction conducted by its dominant publisher ad server DFP, as well as by favoring AdX in how its ad buying tools Google Ads and DV360 place bids on ad exchanges.

According to research firm Insider Intelligence, Google is the world’s biggest digital advertising platform, accounting for 28% of worldwide ad revenue.

Google attempted to resolve the issue three months after the probe was launched, but regulators became irritated with the slow pace and lack of significant concessions, a source familiar with the subject previously told Reuters.


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