Google’s online advertising business is most lucrative. It generated 80 per cent of its total revenue, and amounted to $225 billion in 2022.

Google’s main source of revenue is online advertising. Directly it sells ad space on its own website and apps. Secondly, it intermediates between advertisers and publishers (third party web-sites and apps) that can supply such space.

Google’s advertising technology is being abused — the ad exchange programme favours Google over its rivals. In each ad tech supply chain, the company plays a central role. It charges high fees for its service. Google is present at almost all levels of the so-called ad tech supply chain.

The above case of EU Anti-trust body, is a direct attack on the blackbox of online advertising. Google automatically calculates and offers ad space and prices to advertisers and publishers as a user clicks on a web page. There were three earlier cases against Google where it was fined for abuses of dominance. Such charge sheets can pave the way for as much as 10 per cent of a firm’s global sales. However, they seldom approach that level, and hence the impact on the earnings of Silicon Valley firms is often muted.

EU’s anti-trust arm appealed to Google to come forward with solutions. It has ordered Google to break up ad business.

Google’s ad technology helps advertisers and publishers. They rely upon it for real-time ads (not linked to a search query). For example, banner ads in news web-sites.

There are three tools. First, publisher ad servers for publishers to manage ad space on their web-sites and apps. Second, ad buying tools for advertisers to manage automated ad campaigns. Third, ad exchanges for meeting of the publishers and advertisers to buy and sell ads. Google operates ad buying tools — Google Ads and DV 360. Google operates a publisher ad server — DoubleClick for publishers or DFP and it also operates an ad exchange — AdX.

The EC has taken view that Google breaches anti-trust rules by distorting ad tech. It has publisher ad servers– DFP, programmatic ad buying tools under Google Ads, and favours its own exchanges AdX using tools Google Ads and DV 360.

European Union and US anti-trust regulators agree on one thing — the era of Google’s dominance in ad technology must end.

Since 2014, Google has favoured its own advertising exchange platforms by abusing access to information on rival bids for ad space. It has also harmed other ad exchanges by placing bids for advertising on its own platforms.

Google is active on both sides of the market. It has the publisher ad server. It also has ad buying tools. Thus it holds a dominant position on both the selling and buying side. It also operates the largest ad exchange. There are conflicts of interest in this situation.

Google acquired firms for 15 years to dominate the market. Its 2007 acquisition of online advertising giant DoubleClick deal was worth $3.1 billion.

European Union anti-trust regulators feel that Google must break up. It is a viable option for the California-based tech giant’s alleged monopoly abuses. Of course, there are legal obstacles to the breaking up. It does not mean a legal battle is inevitable. The Commission could be swayed by Google’s arguments or accept a settlement. Google has pointed out that breaking its tech suite would diminish the availability of free, ad-supported, content that benefits everyone.

Google has already entered into an agreement with the French competition regulator, and the company can lean on that to convince the regulators in Washington and Brussels of a less intrusive remedy to the alleged abusive behaviour.