Google is trying to get ahead of antitrust legislation with a proposal to split its ad business between it and its parent company Alphabet.
A report from The Wall Street Journal reveals that the move is designed in part to stave off punitive measures from the US Justice Department related to its dominance within the digital advertising industry.
The report states that as part of one offer, Google has proposed splitting parts of its business that auction and place ads on websites and apps into a separate company under the Alphabet umbrella.
It follows a number of threats of and actual lawsuits from US regulatory bodies related to monopolistic behavior. In 2020 the Justice Department filed a civil antitrust lawsuit related to Google’s activities within the US, particularly where it operates both buying and selling sides of the equation. That activity continues: in May a bipartisan group of lawmakers focused on antitrust issues introduced the Competition and Transparency in Digital Advertising Act bill, which seeks to limit the impact of tech monopolies.
As a result, the proposed solution would move the sell-side of Google Ads to Alphabet, with the remaining side staying with Google. That would in theory allow for other ad operations systems to interact with Google’s tools, opening up the ecosystem ever so slightly and blunting any accusations of it being a legitimate monopoly.
It is unclear to what extent the division would actually impact the ad operations within Google, however. Although there is a nominal division, the different verticals within Alphabet, in general, operate very closely together. Even with the pitch, it is unclear whether regulators would go for the deal given that the details of how it would operate are scant.
It should also be noted that this is reportedly only one part of one mooted solution, with reports that YouTube’s ad practices could be opened up more fully as well.
