The US and EU are poised to rule on a historic case on Google that could free our media and our digital markets from Google’s monopoly. They should align to tackle monopolistic practices, writes Claire Lavin.

Claire Lavin is an EU research fellow at the Open Markets Institute.

The US and EU are on the brink of two historic decisions that could reshape Google’s grip on the digital economy – and breathe new life into our struggling press.

US judge Leonie Brinkema and the European Commission’s DG Competition are both preparing to decide on Google’s liability for monopolising the market in advertising technology and potentially to design remedies to address its stranglehold over the advertising ecosystem.  

This is a critical moment: for the first time, regulators on both sides of the Atlantic have a chance to tackle Google’s monopoly in sync. Their decisions hinge on the future of our press—and, by extension, our democracies. Yet, recent reports have hinted that the Commission could backtrack from its initial proposal to break up Google, missing the chance for the transformation publishers and citizens badly need in this space. 

Google built its monopoly over digital advertising by buying out DoubleClick, Invite Media, and Admeld. Competition authorities allowed these mergers at the time, a decision now widely seen as a grave mistake.

Having locked down where publishers show ads, advertisers put them, and the exchange where the two sides dealt, Google pursued a simple but devastating strategy. It abused its informational advantages and engaged in other anti-competitive practices to secure its place as an indispensable intermediary—publishers and advertisers had nowhere else to go—and extracted profits from its customers. 

This has caused massive damage to our democracies and our economies. Newspapers depend on digital advertising but have struggled to stay afloat. Lost revenues have forced them to cut staff and close local offices. Publishers have been diverted from quality reporting to chasing advertising revenue. This means degraded media coverage and a decline in the quality of the information the public can read.  

Both sides of the Atlantic have the power to mend this broken system. To end the conflicts of interest Google has been exploiting, decision-makers must restore competition, undo the mergers they should never have permitted in the first place, and break Google up.  

This assignment should not be viewed as groundbreaking. It won’t be the first time splitting up corporations. When the EU liberalised its energy markets, companies had to separate their production from transport and distribution to avoid conflicts of interest. 

The challenge now for EU and US decision-makers lies in developing remedies that will work in both jurisdictions. Simply divesting Google of its ad exchange will not suffice, as publishers argued, because Google would still control how ads are displayed and bought.

As Google’s former executive admitted, this is as if Goldman Sachs or Citibank owned the NYSE – an unthinkable situation in financial markets. Google should be required to sell at least the ad exchange and the selling platform. 

A break-up is the start of making these markets fair, but it is not the finish. Structural reforms should be accompanied by clear rules to keep competition fair in the future. These include keeping buyers, sellers, and exchanges separate and requiring all firms to trade on fair, reasonable and non-discriminatory terms. To bolster its advertising business, Google should be prohibited from leveraging its vast ecosystem, such as its search data on users. 

In 2023, several US senators introduced a bill that reflects these solutions. The draft law bans large digital advertising corporations from owning more than one part of the digital ad ecosystem and introduces key safeguards, such as erecting firewalls to prevent conflicts of interest. These measures would go some way to restoring fairness in digital advertising. 

But this fight is too important to leave to one region alone. The US and EU must work together, sharing information and coordinating remedies. This will also simplify Google’s compliance, reducing the risk of loopholes or gaps in enforcement.

Each region should pursue structural remedies independently, as appeals or a change in the political landscape could undermine the decisions. Put differently, one area cannot rely on the other to do the homework. Failing to act risks missing the opportunity to correct these market distortions. 

Requiring Google to sell some of its advertising activities will have serious ramifications. After years of hesitation on tech break-ups in the EU, these rulings could set an important precedent. Google is far from the only US tech monopoly that abuses its power. Authorities using their powers could fix past enforcement failures and set robust conditions before markets tip.  

The EU and US have a chance now to order structural measures that would make our digital lives freer and fairer. This chance must not be underestimated – or missed.  

Source: Euractiv.com