Google has reportedly offered to spin off its ad auction business, which allows companies to buy advertising space on the web and in search results, into a slightly more separate company if it helps avoid antitrust suits, according to a report by the wall street journal. The offer would be among multiple concessions Google has offered to the US Department of Justice as it seeks to avoid further lawsuits alleging anticompetitive practices.
According to WSJ, it would be a cabinet reshuffle. Rather than spin off part of its advertising business into a completely separate company or sell it off entirely, the proposal would make it a separate Alphabet company. Alphabet is the holding company for Google properties, such as Google itself, Waymo, and DeepMind. (Things like YouTube, Pixel, and, of course, AdSense are considered subsidiaries of the Google entity.) So while ad auctions might no longer be run by Google, the money would still end up s stop at the same people. According to WSJthe change could move “tens of billions of dollars” in business.
Google’s dominance and scale in the web apps and advertising industry has already caught the attention of regulators. In 2020, the U.S. government filed antitrust charges against the company, claiming that it “unlawfully maintained monopolies in the markets for general search services, search advertising, and general search text advertising.” The UK’s Competition and Markets Authority recently launched an investigation into Google’s advertising practices as well, saying it intended to look into the company’s ad exchanges and markets.
Google likely wants to avoid further lawsuits and enforcement action, which could end up requiring it to make much bigger changes than what it’s proposing. the wall street journal reports that a new Justice Department lawsuit could be filed in the coming months if it fails to reach some sort of settlement with the company.
Contacted for comment, Google spokesman Peter Schottenfels sent The rod the same statement provided to the wall street journal:
We have worked constructively with regulators to address their concerns. As we have said before, we have no intention of selling or exiting this business, and we are deeply committed to delivering value to a wide range of publisher and advertiser partners in a highly competitive. Rigorous competition in advertising technology has made online ads more relevant, lower fees, and expanded options for publishers and advertisers.