Alphabet Inc. Class C (GOOGL.US) compromise proposal rejected by Justice Department: Business spin-off falls far short of mandatory sale of AdX requirement.
Google (GOOGL.US) once considered divesting some of its advertising technology business to address concerns of anti-monopoly in Europe and the United States. However, the Department of Justice went even further by demanding that Google be forced to sell its advertising exchange platform AdX.
Alphabet Inc. Class C (GOOGL.US) once considered divesting part of its advertising technology business to address antitrust concerns in Europe and the United States, but the external lawyers of this tech giant claimed that the Department of Justice went further demanding that it sell the AdX advertising trading platform.
According to Alphabet's external lawyer Jeannie Rhee, the Department of Justice is seeking to implement "complete technical separation and divestiture" of AdX. After a judge ruled that Alphabet Inc. Class C illegally monopolized two advertising technology markets, the Department of Justice and Alphabet Inc. Class C will begin a two-week hearing next week to discuss whether the company must split off parts of its business.
"Alphabet Inc. Class C did consider divestiture of the business," Rhee stated at the hearing in a Virginia federal court, "but the proposal from the Department of Justice is completely different at every level." Alphabet Inc. Class C currently operates advertising buying services for marketers, advertising selling services for publishers, and a trading platform for transactions to be completed through auctions.
Rhee did not disclose the specific details of Alphabet Inc. Class C's settlement solution. Prior to the lawsuit filed in the United States in 2023, Alphabet Inc. Class C had proposed to spin off the website and app advertising auction business into a separate company, while still keeping it within the Alphabet structure.
Judge Leoni Brinkma, who presides over the case, ruled that the Department of Justice may disclose limited results of the assessments on the feasibility of technical separation within Alphabet Inc. Class C. "Technical feasibility is key in this case," Brinkma emphasized.
Both American and European competition authorities have found that Alphabet Inc. Class C has illegally dominated the advertising technology market by giving its advertising tools a competitive advantage. Earlier this month, the EU imposed a 30 billion (US$35 billion) fine on Alphabet Inc. Class C for anti-competitive practices, marking the second-highest fine from Brussels regulators against the company.
Meanwhile, the United States is seeking a court order from Judge Brinkma to require Alphabet Inc. Class C to immediately sell the AdX trading platform and make its technology interoperable with competitors.
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