Google may be forced to break up its ad business after EU charges

• The EU might force Google to break up its ad business.
• Its competition watchdog said Wednesday that the search giant's digital ads business was anti-competitive.
• The ruling is a threat to the search giant, which generates the majority of its revenue from ads.

Google could be forced to break up parts of its empire after the EU accused it of abusing its dominance in digital ads and "distorting" the competition.

The European Commission said in a preliminary finding on Wednesday that Google should offload a part of its business, following a two-year investigation into the company's threat to competition in the adtech sector. 

Google said in a statement that it disagreed with the initial findings.

The Commission accused Google of "favoring its own online display advertising technology services" at the expense of rivals.

"The Commission's preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns," the Commission's statement said. 

As yet, Google is not being fined nor is it being immediately instructed to break up its business. The company will be able to argue its case, and a final outcome to the Commission's investigation is still pending.

Still, it's a blow for Google, which generates the lion's share of its revenue by selling advertising space on its search engine and other services such as YouTube. Advertising revenue in 2022 totalled $224.5 billion.

More existentially, the news comes as Google faces a newly growing threat from Microsoft, which has supercharged its own search engine Bing with AI. 

EU investigators said "a behavioral remedy is likely to be ineffective," and would instead require Google to sell part of its business to address its concerns.

In a news conference, EU antitrust commissioner Margrethe Vestager said: "Of course I know this is a strong statement but it is a reflection of the nature of the markets, how they function and also why a behavioral commitment seemed to be out of the question."

Google's VP for global ads, Dan Taylor, said the firm's ad business helped fund sites and apps, and businesses to find customers.

"The Commission's investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC's view and we will respond accordingly," he said.