Google, a subsidiary of Alphabet, has agreed to make concessions to avoid a US antitrust lawsuit against its advertising business.
WSJ sources say that as one of the options, Google has proposed splitting its direction, which is engaged in conducting ad auctions and placing ads on websites and apps, into one company. independently as part of an Alphabet holding. Depending on the transferred assets, the business can be valued at several tens of billions of dollars.
It is difficult to say whether such a proposal would be approved by the US Department of Justice, while the antitrust department has reported a change in Google’s advertising direction. The Justice Department has been trying to determine the validity of allegations that the company has been abusing its role as an online advertising broker and auctioneer for a long time. As early as this summer, sources say, the agency could file an antitrust lawsuit.
Google concedes to avoid antitrust.
Any structural change in Google’s advertising business could shake the entire global industry: according to market research firm eMarketer, global online ad purchases will reach 600 billion dollars this year. In comparison, Google’s brokerage services revenue for websites and apps in 2021 amounts to $31.7 billion, and this is approximately 12% of Alphabet’s total earnings.
Regulators around the world are baffled by many aspects of Google’s advertising practices. Today, the company offers a full suite of tools for both advertisers and websites, capable of setting its own prices but rejecting any allegations of such abuse of power. For example, the related departments did not like that about 5 years ago, Google forced them to buy only YouTube ads from it, removing all competitors from this work.
The company is also no stranger to antitrust investigations. In 2013, they had to give in in a confrontation with the US Federal Trade Commission, but they persisted and issued the company three fines totaling $8.4 billion. This will significantly limit Google’s capabilities. Similar regulations are on track to be established in the United States.
