Google faces probe in Italy over alleged 'abuse' of market position

Tom Belger
·Finance and policy reporter
·3-min read
After the company announced it would extend its coronavirus work-from-home order until summer 2021, a  Google sign is shown at one of the company's office complexes in Irvine, California, U.S., July 27, 2020. REUTERS/Mike Blake
Google faces a new probe from regulators. Photo: Mike Blake/Reuters

Google is facing a fresh competition probe in Europe, as Italian regulators launched an investigation into how it used data for online advertising.

The Italian Competition Authority (ICA) is investigating its alleged “abuse” of its dominant position in the market for display advertising in Italy, according to a statement released by the watchdog on Wednesday.

The watchdog has already carried out inspections on Tuesday at Google’s premises, with the collaboration of tax police.

The ICA is examining the search engine giant’s use of the huge amount of data it collects through various applications. The company’s use of such data is alleged to have prevented rivals from competing effectively, as well as “adversely affecting consumers.”

The behaviour of Google, a unit of Alphabet (GOOG, GOOGL), is being looked at for possible violations of EU rules on the availability and use of data for the design of display ad campaigns.

“Google appears to have engaged in an internal/external discriminatory conduct, refusing to provide its competitors with Google ID decryption keys and excluding third-party tracking pixels,” said the ICA.

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“At the same time, Google has allegedly used tracking elements enabling its advertising intermediation services to achieve a targeting capability that some equally efficient competitors are unable to replicate.

It noted Google’s extensive access to user data. “Google has multiple tools allowing a detailed reconstruction of the profile of users who are the addressees of advertisements,” it said.

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“Such tools include the Android mobile operating system, installed on most smartphones used in Italy, the Chrome mobile device browser, for mobile search, the Chrome personal computer browser, Google Maps/Waze cartography and navigation services and all other services provided through Google ID (gmail, drive, docs, sheets, Youtube).”

Any anti-competitive practices in digital advertising could “reduce the resources allocated to website producers and publishers, thus impoverishing the quality of content directed to end customers,” the ICA added.

“Moreover, the absence of effective competition based on merits could discourage technological innovation for the development of advertising technologies and techniques less intrusive for consumers.”

Google has faced regulatory and political scrutiny for years in Europe, the US and elsewhere.

READ MORE: Big Tech chiefs face US Senate panel

In the US, the firm has been under investigation by the Justice Department, the Federal Trade Commission, and state attorneys general over concerns its search engine and digital advertising businesses may operate as illegal monopolies.

Last week the Department of Justice and 11 US states filed an antitrust lawsuit, accusing Google engaging in anticompetitive behaviour.

The long-anticipated lawsuit claimed that Google used anticompetitive tactics to maintain its dominance in general search, search advertising, and general search advertising — what the lawsuit calls “the cornerstones of its empire.”

Google has been approached for comment on the Italian investigation.

Last week Kent Walker, senior vice-president of global affairs at Google, called the US action a "deeply flawed lawsuit that would do nothing to help consumers."

In a detailed blogpost on Google's website, he wrote: "People use Google because they choose to, not because they're forced to, or because they can't find alternatives.

"This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”