President Donald Trump in a social media post stated, “Europe today ‘hit’ another great American company, Google, with a $3.5 Billion fine, effectively taking money that would otherwise go to American Investments and Jobs.”
On Saturday, Trump stated, “Please let this Statement serve to represent that Google has also paid, in the past, $13 Billion in false claims and charges for a total of $16.5 Billion. How crazy is that? The European Union must stop this practice against American Companies, IMMEDIATELY!”
What Happened:
The European Commission on Friday fined Alphabet Inc.’s GOOG GOOGL Google around $3.46 billion (2.95 billion euros) for violating antitrust rules by unfairly promoting its own advertising technology services at the expense of competitors, advertisers, and online publishers.
The Commission concluded that Google’s self-preferencing practices distorted competition in the online display advertising sector, known as ‘adtech,’ and ordered the tech giant to stop such conduct and address conflicts of interest in the adtech supply chain.
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Google now has 60 days to propose corrective measures to the Commission, which will review them before deciding on further action.
Why It Matter:
Google, with advertising as its primary revenue source, operates several tools that connect advertisers and publishers.
These include “Google Ads” and “DV360” for programmatic ad purchaseing, “DoubleClick for Publishers (DFP)” as a publisher ad server, and “AdX” as an ad exalter. Advertisers and publishers rely on such tools to manage and place real-time display ads — such as banners on news websites — that are not linked to search queries.
In a press release on Friday, the Commission’s investigation found that Google holds a dominant position in two key European markets: publisher ad servers with “DFP” and programmatic ad purchaseing with “Google Ads” and “DV360.”
Since 2014, Google has abapplyd this dominance in violation of EU law by favouring its own services.
It gave its exalter, “AdX,” privileged information on competitor bids and structured its bidding tools to favour AdX over competing exalters. This gave AdX a significant competitive edge, allowing Google to charge higher fees and crowd out rivals.
The Commission concluded that these practices deliberately advantaged AdX and reinforced Google’s central role in the adtech ecosystem, potentially limiting competition.
Price Action: GOOG stock closed at $235.17 on Friday.
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