EU Probe Forces Google Offer Rivals Ads on YouTube

As of June 2022, the EU and the Competition and Markets Authority (CMA) have come out with their second probe into Google’s bad practices with its advertising technology.

In November of 2021, the European Union started its first investigation into whether or not Google was giving unfair advantages to its affiliate companies. The EU suggested that Google was providing them with greater access to use its digital advertising services.

These aren’t the first times Google has come under fire though. 

In hopes of amping up security, Google put out new rules for its Play Store to require developers to use its own payment system for the sale of app services. App developers criticized these measures in the past months. This step comes from Google’s efforts to remove outdated apps that no longer support its latest features. Google had previously stated that any apps that hadn’t jumped onto the train by June 1st would be pushed out of the Play Store entirely. Now, Google is giving Android apps some time to get their updates in by November 2022.

Prior to this, in January of 2021, the CMA blocked Google from implementing its tool-building alternative to replace third-party cookies called Privacy Sandbox. The CMA had opened a probe under Chapter II in the U.K.’s Competition Act of 1998 in “suspected breaches of competition law by Google”.

Google commented on the matter stating, “Creating a more private web, while also enabling the publishers and advertisers who support the free and open internet, requires the industry to make major changes to the way digital advertising works. The Privacy Sandbox has been an open initiative since the beginning and we welcome the CMA’s involvement as we work to develop new proposals to underpin a healthy, ad-supported web without third-party cookies.”

Now, Google is under fire again, this time for how it divies its platform to ad users.

Google’s lead in 3 major parts of the ad tech intermediation, aka the adtech stack, has been a huge factor in how this investigation began. 

One of the three major parts that the CMA and EU are looking into is how Google offers its services to marketers and publishers. In this so-called “digital stock market”, an ad exchange takes place. This ad exchange uses automated trading where both sides compete in making transactions. Competitors have issued that Google illegally leverages certain criteria in these exchanges to benefit some and anchor others.

CEO of the CMA, Andrea Coscelli stated, “Google might have even taken extra steps to exclude rivals’ use of its services”.

The other two major parts of this investigation are Google’s use of demand-side platforms (or DSPs) which give marketers and publishers the access to buy the advertising and publisher ad servers. These servers decide which of these ads it will show on its sites.

And this is only the short of numerous governments’ lawsuits attempting to regulate several of the U.S.’s tech giants and their partners. These tech giants like Google, Amazon, and Meta have grown vastly in the last two years – just after the start of the pandemic.

The United States Department of Justice, plus 11 states’ Attorneys General, started their antitrust lawsuit in the fall of 2020 for the same issue of concern now, in 2022. 

Ireland’s Data Protection Commission projected a statutory inquiry into Google’s processing of location data back in May of 2019. The investigation commenced to confirm whether Google meets the requirements to have usage as a “data controller” – to which Google then took all the steps for a swift recovery.

A statement put out by Google said, “Our advertising technologies help websites and apps fund their content, enable small businesses to grow, and protect users from exploitative privacy practices and bad ad experiences”.

Alphabet, Google’s parent company, is one of the world’s largest tech empires. With 32% growth in revenue reported for quarter one – Alphabet comes in at $1.75 trillion as of March 2022. Google comes in with $147 billion of revenue alone to the parent company. Ever since Google’s 20-for-1 stock split that was announced on February 1st of this year, you can now purchase 1 stock share of GOOGL (Class A) for $2,274.83 as of July 5, 2022 and $2,291.94 for GOOG (Class C). 

It makes its large by continued ads from apps like YouTube and Google services like Gmail and Google Cloud. Google bought the video sharing platform, YouTube, in October of 2006 for a reported $1.65 billion. At that time, it was Google’s second-largest acquisition to date. Bringing in $6.9 billion in revenue in just the first quarter of 2022 alone, YouTube is now one of Google’s top producers. Google, now hopes that by offering its rivals (like Microsoft’s Bing and Yahoo), ads on one of its largest revenue contributors, it may repeal these fines.