Google Offers To Spin-Off Ad-Tech Unit – Report

Alphabet’s Google unit has reportedly offered concessions to US authorities, as it faces multiple antitrust probes around the world into its advertising technology business.

The Wall Street Journal, citing people familiar with the matter, reported on Friday that Google has proposed spinning off parts of its business that auctions and places ads on websites and apps into a separate Alphabet company.

But it seems doubtful this move would satisfy publishers and companies in the ad tech space, and even regulators around the world, as Alphabet would still be in control of the firm.

US antitrust lawsuit

The US Department for Justice sued Google in October 2020, alleging that Google abuses its position to maintain an illegal monopoly over search and search advertising.

This lawsuit is perhaps one of the most significant legal threats to a major tech company, with the possibility of an enforced breakup of Google.

The DoJ in its October 2020 made clear that it views ‘monopolist Google’ as having violated antitrust laws.

The DoJ is going after Google using the Sherman Act from 1890, in much the same way it pursued Microsoft in the late 1990s (Redmond survived intact) and AT&T in 1974 (which led to the breakup of the Bell System).

Google hit back hard against the DoJ in 2020, calling the DoJ lawsuit “deeply flawed”.

And Alphabet has responded to the Wall Street Journal report that it is willing to spin off its ad tech business telling Reuters that it was engaging with regulators to address their concerns, adding that it has no plans to sell or exit the ad-tech business.

“We’re deeply committed to providing value to a wide array of publisher and advertiser partners in a highly competitive sector,” the Google-parent told Reuters.

A spokeswoman for the Justice Department reportedly declined comment.

Other probes

The US antitrust probe is not the only investigation Google is contending with on this matter.

In May this year Google said it would co-operate with the UK’s Competition and Markets Authority (CMA) after it confirmed a second investigation of the tech giant.

The CMA investigation into Google’s advertising technology intermediation, also known as the ‘ad tech stack’, which is a complex set of services which facilitate the sale of online advertising space between sellers (publishers, content providers etc) and buyers (advertisers).

This was the second CMA investigation Google is facing over its advertising practices.

In March the CMA (as well as the European Commission) both opened formal antitrust investigations into Google and Meta (aka Facebook).