Margrethe Vestager eyes new charges against Google

European Commissioner for Competition Margrethe Vestager | Frederic Florin/AFP via Getty Images

Margrethe Vestager eyes new charges against Google

The tech giant navigates growing list of problems in Europe. Now, its advertising business comes under scrutiny.

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European Competition Commissioner Margrethe Vestager appears ready to file antitrust charges against Google’s highly lucrative advertising business, opening a new front in her sprawling battle with the internet giant.

Investigators have asked companies to remove confidential material from evidence submitted against Google business lines like AdWords and AdSense for Search, according to three people with direct knowledge. Regulators make this request before formalizing their accusations, though lawyers cautioned that such requests do not always lead to charges.

Google’s advertising business displays tens of billions of ads daily on the company’s sites like Google.com and YouTube, as well as on non-Google websites. It generated $19 billion in revenue alone IN the fourth quarter of last year, representing 90 percent of the company’s total, according to the trade publication Advertising Age.

If the company is found guilty of breaching EU competition rules it faces a potential fine of billions of euros, with a maximum of 10 percent of the company’s annual revenue per infringement.

Vestager has already leveled formal charges against Google’s product search service, Google Shopping, and its super-popular Android operating system for smartphones, which the firm vigorously contests.

Brussels’ antitrust enforcers are proving a major headache for the internet giant following the 2014 collapse of settlement talks over Google Search, including Shopping, and Google’s advertising business. The company is navigating a growing list of problems and opponents in Europe on issues ranging from antitrust to privacy to tax.

Any further European action targeting Google, whose parent-company Alphabet is the U.S.’s second largest by market value, risks fueling accusations in Washington of European protectionism. U.S. antitrust regulators have yet to lodge any formal challenge against Google.

By contrast, the Google case is a legacy-defining issue for Vestager. Politicians in Berlin and Paris have threatened legislation in the absence of tough action.

One major danger for the Mountain View, Calif.-based firm is that Europe sets out red lines that inspire regulators from Seoul to Brasilia.

Google did not respond to requests for comment. The Commission declined to comment.

Concerns over Google’s terms and conditions for websites and advertisers loomed large when the Commission opened a formal antitrust inquiry in 2010.

Two  years later, it singled out two aspects of Google’s advertising business. One concern was the way it required websites to carry its own search-based adverts. The other was about restrictions on companies exporting their Google advertising campaigns to other digital platforms.

The Commission said those terms may have starved other ad-servers as well as rival search engines of business.

Since settlement talks collapsed, the antitrust regulator has pushed forward other concerns. The advertising business seemed off the radar until recently.

Earlier this year, Vestager again started poking around. In May, she told Bloomberg she wanted to reach a decision within a “reasonable time frame.”

The online advertising sector has developed significantly since the Commission announced its main concerns in 2012.

Google’s advertising business has grown exponentially by pegging ads to its market-leading video platform YouTube, among other developments. Meanwhile it has expanded its presence in the complex ecosystem for selling and placing ads.

Rivals claim Google exerts a powerful influence on the advertising supply chain by owning online ad networks, servers and exchanges, as well as carriers like YouTube, Gmail and Search.

Martin Sorrell, chief executive of WPP, the world’s largest communications company, has described Google in the past as a “frenemy” and called on online ad platforms to share more data with advertisers. Of the $73 billion WWP spent on behalf of clients last year, some $4 billion went to Google and $1 billion to Facebook, Sorrell told the Wall Street Journal last week.

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Despite inquiries dating back to 2009, Brussels has yet to sanction Google for any antitrust abuse.

Google’s lawyers are preparing a response rebutting  antitrust charges leveled against Android in April.

They already responded last year to charges targeting Google Shopping, leaving investigators pondering their next move.

Ideally, they would like to use a negative ruling against Google Shopping to force changes across other Google specialized search services, like Google News, Google Local Search or Google Travel.

Signs of movement in the Google Shopping case suggest Google’s lawyers could be in for a hot summer.

Authors:
Nicholas Hirst 

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