Alphabet (GOOGL) – Get the Class A report from Alphabet Inc. does not seem very welcome in Europe.

Alphabet’s Google unit is still battling a $1.6 billion (€1.49 billion) fine imposed by EU antitrust authorities three years ago.

The EU has accused Google of obstructing rivals’ online search advertising.

The fine is just one of three measures the EU has taken against the internet giant, totaling $8.8 billion (€8.25 billion).

In 2021, the company lost its court battle against a $2.8 billion (€2.42 billion) fine after EU regulators ruled in 2017 that Google had pushed its own data services. purchase on its platforms. The company challenged the decision, leading to a years-long review process.

But those fines pale in comparison to the $5 billion (€4.34 billion) fine the EU imposed on Google in 2018 and which the company is still battling.

The sanction was imposed after regulators said the company had been using its Android mobile operating system since 2011 to hamper rivals and bolster its own internet search business.

It was the largest fine ever imposed on the company, and Alphabet is asking the court to reduce the fine or waive it altogether.

Despite all the regulatory hurdles, the European market remains incredibly lucrative for the company.

Google absolutely dominates the European search engine market with a market share of over 92%. For comparison, in the United States, Google has an 87% market share.

Google’s problems worsen in the UK

Unfortunately for Google, the UK is no longer part of the EU, so the company has to overcome various regulatory hurdles.

Scroll to continue

On May 26, the UK Competition and Markets Authority opened a new investigation into whether Google broke its laws by restricting, you guessed it, competition in digital advertising.

This is the agency’s second investigation into Google, but this time the CMA is examining “whether Google has limited the interoperability of its ad exchange with third-party publisher ad servers and/or has contractually tied these services together, making it harder for competing ad servers to compete.”

The CMA is also investigating whether Google used its publisher ad server and demand-side platforms to illegally promote its own ad exchange services “while taking steps to exclude services offered by its competitors.” .

“We are concerned that Google is using its position in ad technology to favor its own services over rivals, customers and ultimately consumers,” said CAM chief executive Andrea Coscelli.

“Weaker competition in this area could reduce advertising revenue for publishers, who may be forced to compromise the quality of their content to cut costs or put their content behind paywalls. It may also increase costs for publishers. advertisers who pass on higher prices for advertised goods and services.”

Google struggles with ad revenue

For the first time in a long time, Alphabet’s stock price is experiencing a prolonged decline. Year-to-date, shares are down about 27%.

While the broader market has also slumped in recent weeks, Alphabet’s difficulties were peaking ahead of the market sell-off.

Reading the tea leaves suggests that online ad revenue could continue to falter in 2022, and that’s the lion’s share of Alphabet’s revenue.

Earlier this week, social media company Snap Inc. (INSTANTANEOUS) – Get the Class A report from Snap, Inc. warned investors that a “deteriorating” global economy would hurt its results.

Snap, which depends on ad spend for the vast majority of its revenue, said the “macroeconomic environment has deteriorated further and faster than expected,” forcing companies to cut ad spend as they reevaluate priorities. in a declining economy.

If the global economy truly heads into a recession, advertising spending will undoubtedly come under pressure.

Just one more headwind for Google as Europe tightens its corporate regulation.

About The Author

Related Posts