Yes, Brussels really wants Google to be broken up

A message from Brussels to Google: Would you break yourself up, please?

The search giant faces an early November deadline to say how it intends to comply with a European Commission decision in September, which found that it had illegally maintained its grip on the infrastructure that powers online advertising.

With a €2.95 billion fine in the rearview mirror, the Commission and Google find themselves in an unprecedented standoff as Brussels contemplates the once unthinkable: a structural sell-off of part of a U.S. company, preferably voluntary, but potentially forced if necessary.

The situation is “very unusual,” said Anne Witt, a professor in competition law at EDHEC Business School in Lille, France.

“Structural remedies are almost unprecedented at the EU level,” Witt added. “It’s really the sledgehammer.”

In its September decision, the Commission took the “unusual and unprecedented step,” per Witt, to ask Google to design its own remedy — while signaling, if cautiously, that anything short of a sale of parts of its advertising technology business would fall foul of the EU antitrust enforcer.

“It appears that the only way for Google to end its conflict of interest effectively is with a structural remedy, such as selling some part of its Adtech business,” Executive Vice President Teresa Ribera, the Commission’s competition chief, said at the time.

As the clock counts down to the deadline for Google to tell the Commission what it intends to do, the possibility of a Brussels-ordered breakup of an American tech champion is unlikely to go unnoticed in Washington, even as the Donald Trump administration pursues its own case against the search giant. (Google accounts for 90 percent of the revenues of Alphabet, the $3.3 trillion technology holding company headquartered in Mountain View, California.)

Google has said that it will appeal the Commission’s decision, which in its view requires changes that would hurt thousands of European businesses. “There’s nothing anticompetitive in providing services for ad buyers and sellers, and there are more alternatives to our services than ever before,” Lee-Anne Mulholland, its vice president and global head of regulatory affairs, wrote in a blog post in September.

Parallel probes

The proposal for a voluntary break up of Google marks the culmination of a decade of EU antitrust enforcement in digital markets in which “behavioral” fixes achieved little, and a unique alignment in both timing and substance between the U.S. and the EU of their parallel probes into the firm’s ad tech empire.

“It would have been unthinkable 10 years ago that there would be a case in the U.S.  and a sister case in Europe that had a breakup as a potential outcome,” said Cori Crider, executive director of the Future of Tech Institute, which is advocating for a break-up.

The Commission formally launched the investigation into Google’s ad tech stack in 2021, following a drumbeat of complaints from news organizations that had seen Google take control of the high-frequency exchanges where publishers and advertisers agree on the price and placement of online ads. 

Google’s control of the exchanges, as well as infrastructure used by both sides of the market, was like allowing Goldman Sachs or Citibank to own the New York Stock Exchange, declared the U.S. Department of Justice in its lawsuit in 2023.

It also created a situation in which cash-strapped news organizations on both sides of the Atlantic saw Google eating an increasing share of revenues from online advertising — and ultimately posing a threat to journalism itself.

“This is not just any competition law case — this is about the future of journalism,” said Alexandra Geese, a German Green member of the European Parliament. “Publishers don’t have the revenue because they don’t get traffic on their websites, and then Google’s algorithm decides what information we see,” she said.

The plight of publishers proved hefty on the other side of the Atlantic too.

In April, the federal judge overseeing the U.S. government’s case against Google ruled that the search giant had illegally maintained its monopoly over parts of the ad tech market.  

The Virginia district court held a two-week trial on remedies in September. The Trump administration has advocated a sale of the exchanges and an unwinding of Google’s 2008 merger with DoubleClick, through which it came to dominate the online ad market. Judge Leonie Brinkema will hear the government’s closing arguments on Nov. 17 and is expected to issue her verdict in the coming months.

Stars align

Viewed by Google’s critics, it’s the ideal set of circumstances for the Commission to push for a muscular structural remedy.

“If you cannot go for structural remedies now, when the U.S. is on the same page, then you’re unlikely to ever do it,” said Crider.

The route to a breakup may, however, be both legally and politically more challenging.

Despite the technical alignment, and a disenchantment with the impact that past fines and behavioral remedies have had, the Commission still faces a “big hurdle” when it comes to the legal test, should it not be satisfied with Google’s remedy offer, said Witt.

The U.S. legal system is more conducive to ordering breakups, both as a matter of law — judges have a wide scope to remedy a harm to the market — and in tradition, said Witt, noting that the U.S. government’s lawsuits to break up Google and Meta are rooted in precedents that don’t exist in Europe.

Caught in the middle is Google, which should file its proposed remedies within 60 days of being served notice of the Commission decision that was announced on Sept. 5.

A spokesperson for the company said that the firm disagrees with the Commission’s charges, and therefore with the notion that structural remedies are necessary. The firm is expected to lodge its appeal in the coming days.

While Google has floated asset sales to the Commission over the course of the antitrust investigation, only to be rebuffed by Brussels, the firm does not intend to divest the entirety of its ad tech stack, according to a person familiar with the matter who was granted anonymity due to the sensitivity of the case.

Ultimately, what happens in Brussels may depend on what happens in the U.S. case.

While a court-ordered divestiture of a chunk of Google’s ad tech business is conceivable, U.S. judges have shown themselves to be skeptical of structural remedies in recent months, said Lazar Radic, an assistant law professor at IE University in Madrid, who is affiliated with the big tech-friendly International Center for Law and Economics.

“Behavioral alternatives are still on the table,” said Radic, of the U.S. case.

The Commission will likely want to align itself with the U.S. should the Virginia court side with the Department of Justice, said Damien Geradin, legal counsel to the European Publishers Council — of which POLITICO parent Axel Springer is a member — that brought forward the case. Conversely, if the court opts for a weaker remedy than is being proposed, the Commission will be obliged to go further, he said.

“This is the case where some structural remedies will be needed. I don’t think the [European Commission] can settle for less,” said Geradin.