Exclusive: Google faces EU antitrust charges over adtech business

BRUSSELS, Oct 13 (Reuters) – Alphabet’s ( GOOGL.O ) unit of Google could face an EU antitrust case next year over its digital advertising business, putting the company at risk of a fourth fine in the EU of more than one billion euros. with on Thursday.

Google’s advertising business is Alphabet’s biggest moneymaker, with sales of more than $100 billion last year. Despite efforts over the past decade to sell hardware, subscription services and cloud computing technology, it accounts for 80% of annual revenue.

The European Union Commission launched an investigation into Google’s adtech business in June last year amid concerns that the US tech giant may be gaining an unfair advantage over its rivals and advertisers.

The company, which risked a fourth billion-euro fine, wanted to settle the case, but offers were small and very preliminary, one of the people said. Google has collected more than 8 billion euros ($7.7 billion) in EU antitrust fines over the past decade.

The European Union’s competition watchdog could issue the case early next year, although the timing could still change, one of the people said.

The commission requires third parties to redact confidential details when they submit them, which is usually a condition for allowing Google access to documents after receiving a statement of objections, one of the people said.

Google may drop the charges by offering additional offers to settle the investigation. Some companies prefer to look at the actual regulatory concerns before proposing suitable solutions for them.

The commission declined to comment. Facebook and Instagram owner Meta Platform Inc ( META.O ) previously had no comment on the world’s leading online ad seller, Google.

THE HEART OF THE GOOGLE BUSINESS MODEL

The case centers on Google’s ad-based business model and affects advertisers, publishers, ad technology providers and users, said Dieter Pamen of the law firm Clifford Chance.

“It’s been a long time coming – advertisers and publishers have been up in arms about Google’s ad-tech behavior for years. Google is working on a variety of ad deals, giving both publishers and advertisers a raw deal,” he said.

Google’s dominance in online advertising has come into question over the past few years. Complaints from competitors about alleged anti-competitive practices have led to antitrust investigations on five continents.

Google’s advertising business generated nearly $111 billion in sales in the first half of the year. Analysts expect Google to generate $233 billion in ad sales this year, up about 11% from a year ago, according to Refinitiv estimates.

Google’s ad business includes many segments, but search ads lead the way in terms of revenue. Other aspects include selling ads on websites and apps of external partners, and selling ads on YouTube, Gmail and other in-house services.

Reporting by Fo Yun Chee, additional reporting by Paresh Dave in Oakland, California; Editing by Susan Fenton, David Evans, and David Gregorio

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