Google Proposes Splitting Ad-Tech Business To Prevent Antitrust Suit

Google proposes restructuring the company’s division that auctions and places web advertising into a separate company under Alphabet, Inc, the search engine’s parent company. Depending on the assets included, this could be worth billions of dollars.

Proposal Suggests Investigation Is Nearing Completion

The Justice Department has been investigating allegations that Google has abused its power as a digital advertising broker and auctioneer for some time. As recently as October 2020, it sued the company over claims it was illegally using its power to hamstring competitors.

Currently, the department is preparing a lawsuit alleging anti-competitive practices, which could be filed sometime this summer.

Google Under Fire From Several Directions

This latest charge comes on the heels of three antitrust suits from the European Union, in which Google was fined $1.6 billion for abusing its position as a dominant search engine between 2006 and 2016.

The search engine is also facing a lawsuit from several states, which accuses the company of running a monopoly. Google, however, has motioned to dismiss the case, claiming it is inaccurate and lacks merit.

Additionally, a bipartisan bill was introduced in Congress in May, which seeks to break up the company’s digital advertising business. The Competition and Transparency in Digital Advertising Act would ban companies that process more than $20 billion in digital ad transactions annually from participating in more than one part of the digital ad process.

In a statement, a Google spokesman acknowledged the growing competition in online ad technology while insisting there were “no plans to sell or exit this business.”

Split Could Change Process Of Ad Bidding, Lower Costs

Whether the Justice Department agrees to this proposal or the case goes to trial, this latest allegation could broadly affect digital marketers.

Should Google’s ad-tech division be split up, it could open the door for other digital ad companies to claim a more significant piece of the market. This increased competition could lead to lower prices as each company seeks to undercut its rivals for its share of ad revenue.

Last year, Google’s advertising revenue was more than $209 billion.

Source: Wall Street Journal

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