Ad-quake: Are EU regulators about to break up Google’s adtech party?

Google’s ad-tech business is in jeopardy of becoming fragmented with European Union antitrust regulators reportedly preparing to order Alphabet's Google to sell part of its adtech business. 

According to Reuters, the EU’s most influential antitrust regulator, the European Commission, could issue a formal charge sheet against Google as early as some time this week. 

If it occurs, the move would escalate trans-Atlantic attempts to reduce Google’s stranglehold on the digital ads industry. 

First reported by the Wall Street Journal, these rumours echo previous attempts from antitrust regulators to break-up Google’s ads party. A little less than 12 months ago, the tech giant fended off a US antitrust lawsuit by offering to spin off its advertising technology business into a standalone unit under parent company Alphabet.

For advertisers, the move could have major implications on the reach and costs of some of the most popular ad tech tools on the market. The Google Ads and the Google Marketing platforms account for around a quarter of  market share in the digital advertising industry, placing it ahead of Meta as the largest digital ad seller worldwide. 

Google’s ad tech services span most of the digital ecosystem from search and display programmatic to email and even digital out-of-home, so greater restrictions could prompt advertisers to shift their adspend to smaller competitors. 

PMW spoke to a panel of performance marketing experts to understand the wider effects of the move… and why the regulators are closing in now. 

“It would definitely be very good for the ad ecosystem”

Farhad Divecha, Founder and MD of AccuraCast, commented on what this would mean for digital marketers and the broader digital ads industry 

"This is an interesting development,” he said. 

"It would definitely be very good for the ad ecosystem, especially search ads where Google has a monopoly and abuses it wantonly - I can't think of any other situation where customers spend millions and yet get either no service or horrible levels of service that put even the worst call-centres to shame.

"But that said, what is Google without the ad ecosystem? Earnings figures have repeatedly shown the ad platform is what props up the business, so separating the search engine video and mobile platforms from the ad engine would be a challenge for Alphabet."

“Independent ad tech vendors should consider this as an opportunity to gain a larger foothold.”

Benjamin Dunkel, Vice President, Ecosystem Growth at Alkimi, said: “Google has cemented its dominance within digital advertising via various tactics in recent years, but the ones now being investigated by the European Union antitrust regulators have long been known to those across the industry. The proceedings will be closely watched as the ramifications will affect all players – whether positive or negative. However, with the scrutiny Google is under narrowing its room for innovation and manoeuvre, independent ad tech vendors should consider this as an opportunity to gain a larger foothold.

“If Google is forced to sell off parts of its business, this could greatly increase the scope for innovation and competition. Development needs to focus on increasing transparency and efficiency within the industry, while also cutting down the emissions that digital advertising produces. Ground-breaking technologies such as decentralised exchanges will be vital to achieving these goals, and regardless of the outcome of this latest antitrust decision, the industry should evolve by embracing these solutions.”

“Many of us in ad tech questioned why Google got off the hook for so long”

Chris Hogg, CRO at Lotame, said: “It was only a matter of time before Google's dominance in advertising technology would be challenged by the regulators. After decades of similar actions being taken against tech monopolies, many of us in ad tech questioned why Google got off the hook for so long. 

“But better late than never, and any such move to break up big tech’s stranglehold on innovation is welcome. The question now is whether this action against Google’s ad tech arm will take the heat off its search and YouTube businesses, which generate the majority of the company’s revenue and are arguably no less guilty of anti-competitive practices.” 

“Potentially leaving the open ad tech ecosystem”

Romain Job, Chief Strategy Officer, Equativ, said: "This idea of forcing Google to divest this business isn't new. It's been mentioned several times in the news around the ongoing DOJ investigations, and Google seems to be preparing actively for this eventuality. First, they already proposed one year ago to isolate their ad tech business unit in the Alphabet group. 

“And then their recent product investments in the YouTube ad platform and in the privacy sandbox as a Chrome integrated ad engine demonstrates that they're preparing for a Google ad business outside of their ad tech unit. All of this would be a way for them to maintain their ad revenue by strengthening their walled garden, potentially leaving the open ad tech ecosystem.”