Google has made a new offer to the European Commission, which seeks to curb deep concerns over its supremacy in the online advertisement market. The company argues that the program will clear the current antitrust lawsuits that are filed against the company without having to disaggregate its advertisement processes.
It is a significant development as the regulatory scrutiny becomes more and more active not only in Europe but also in the rest of the United States, where regulators have a critical look at the power that large technology conglomerates have and exercise over digital marketplaces.
Over a long period of time, publishers, advertisers, and competing advertising technology ventures have claimed that Google has a virtual monopoly on the online advertising supply channel. The European Commission agrees with these concerns. In September, the Commission fined Google with a fine of 2.95 billion euros over favoring its own advertising services- an action, which, as regulators said, increased the power of its advertising business, AdX. This behavior was considered to undermine competition and reduce the level of choice for both publishers and advertisers.
The Commission responded to this fiscal penalty by asking Google to propose a remedial solution to it by November and indicated that a sale of some of its ad-technology business could be a condition to end the existence of the conflicts of interest identified. Google vehemently opposed this suggestion, claiming the impracticality, disruptive nature, and negative implications of the proposal to the myriad businesses that depend on its platforms.
The present proposal of Google aims at solving the EU fears without dissolving the business. It is similar to the modifications that have already been introduced to the U.S. Department of Justice in a similar case. The company claims that the plan includes instant product changes that are aimed at ending the practices that are under scrutiny by regulators.
The main change is the one that provides that, in the case of using Google Ad Manager, publishers may set different minimum bid prices to disparate bidders. The amendment is supposed to make publishers have better control over how they allocate their ad inventory. At the same time, Google plans to increase the interoperability of its ad toolset, thus providing additional system-selection latitude to advertisers and publishers.
According to Google, these actions will correct the problem, and they will maintain the stability of the market. It also states that a forced separation would create long-term uncertainty, especially to smaller publishers who are still very much reliant on the services of Google.
Although Google has come up with a new proposal, the Commission may not be satisfied. Early indications to Reuters indicated that the EU could still enforce a divestiture in case Google still indulges in activities that inhibit competition. This contingent possibility is not exactly new; it has been around two decades since the Commission applied strict enforcement measures in a key case against Microsoft, setting a precedent of strict regulatory measures.
Furthermore, the decision of a similar case in the United States can be taken into consideration to affect the decision of the EU. In case a U.S judge supports the Justice Department's position and orders the AdX divestiture, it would enhance the bargaining power of the EU.
The proposal by Google will now be subject to scrutiny by the Commission, as it will be determined whether Google is doing enough to restore healthy competition. The result of this discussion will define the future of the European digital advertisement market and may be used as an example of international regulatory practices to large technology companies.
Currently, Google is trying to prevent structural disaggregation, whereas the EU aims at creating a level playing field. The final decision will help to understand how regulators are ready to implement actions limiting tech giants and protecting the competitive process.