Alphabet-C may face the risk of splitting! The EU accuses Alphabet-C of abusing its advertising monopoly position.
The European Commission has accused Alphabet-C of abusing its dominant position in the advertising industry. "Our preliminary view is that only by forcing Alphabet-C to divest some of its services can we fully address competition concerns," the commission said.
The regulation of tech giants in Europe is becoming increasingly strict.
On Wednesday, June 14th, the EU launched an antitrust lawsuit against Alphabet-C, accusing the company of abusing its dominant position in advertising technology to suppress competition. The lawsuit strikes at the core of the US company's revenue model and could force Alphabet-C to divest its lucrative advertising business.
Margrethe Vestager, the EU's Commissioner for Competition, said that Alphabet-C supports its own advertising trading plan rather than its competitors' projects, strengthening its core role in the advertising technology supply chain and its ability to charge high service fees. She said at a press conference on Wednesday that if the European Commission finds that Alphabet-C has engaged in illegal behavior, Alphabet-C may be forced to divest some of its advertising sales services. In a statement, she said:
At almost every level of the so-called advertising technology supply chain, Alphabet-C is present. Our preliminary concern is that Alphabet-C may have used its market position to support its own advertising services.
It is crucial that the European Commission has stated that even if Alphabet-C is required to take remedial action, it may not be enough to correct the abusive behavior, which means that the Commission may require Alphabet-C to divest its advertising business from its core services. The European Commission said:
Our preliminary view is that only by forcing Alphabet-C to divest some of its services can we fully address competition concerns.
This move by the EU could be a major blow to Alphabet-C. Research firm Insider Intelligence data shows that Alphabet-C is the world's most dominant digital advertising platform, accounting for 28% of global advertising revenue. The advertising business is Alphabet-C's cash cow, contributing about 80% of its revenue last year, or $224.5 billion.
Media reports citing insiders said the new charges are the most significant antitrust action by the European Commission in its current five-year term.
The EU's charges against Alphabet-C come after three previous cases against the company, in which the EU fined Alphabet-C more than €8 billion for abusing its dominant position in mobile operating systems, search and display advertising businesses since 2017.
Alphabet-C continues to refute the EU's latest charges. Alphabet-C issued a statement opposing the European Commission's charges. On Wednesday, the EU's antitrust agency called on Alphabet-C to propose a solution.
Insiders said that after the EU launched its investigation for three months, Alphabet-C sought to settle with the European Commission. However, during the negotiations, Alphabet-C made only small concessions, which were all preliminary compromises, causing the European Commission to lose patience with the settlement.