TLDRs;
- EU regulators raise concerns Google may inflate search ad prices through auctions, pressuring advertisers across Europe.
- Google asserts its ad auctions are competitive and help small businesses, denying anti-competitive conduct.
- The inquiry comes amid broader antitrust scrutiny in the EU and U.S., increasing regulatory risk for Google.
- Any required ad system changes could impact advertisers, publishers, and Google’s revenue, signaling potential market weakness.
Google (GOOGL) is facing fresh regulatory pressure as the European Commission signals concerns over potential inflation of online ad prices. A February 9 letter from the commission, seen by Reuters, highlighted that Google’s search ad auction practices may be artificially raising clearing prices, the final amounts advertisers pay after auctions.
While the commission has not opened a formal investigation, the correspondence marks an early stage of scrutiny that could carry significant implications for the tech giant. Recipients of the letter have until March 2 to respond, underscoring the urgency of the regulator’s inquiry.
Google Defends Auction Practices
Google has pushed back against the concerns, arguing that its search ad platform enables small businesses to compete and maintains a free and open web. The company emphasized that ad prices are determined through real-time auctions based on competition, ad quality, and other factors.
The letter does not mention Google Ad Manager’s earlier shift from second-price to first-price auctions for publisher ads, nor does it reference “last look” privileges or AdSense auction differences. Despite these omissions, the probe raises questions about transparency and fairness in how Google prices ads, particularly in the search segment.
Antitrust Pressure Mounts Globally
The European scrutiny adds to a growing list of antitrust challenges for Google’s advertising and search businesses. In the U.S., Google has faced court rulings finding it abused its monopoly in internet search, with the company signaling it will appeal. The U.S. Justice Department has also accused Google of manipulating online auctions to favor its own services.
Google, the target for billions of euros in European Union antitrust fines, has been hit by a fresh EU probe over concerns it’s illegally rigging the cost of advertising on its search engine. https://t.co/yQs7HOeX7h
— Bloomberg (@business) February 12, 2026
Regulators have warned that potential changes to Google’s ad systems could have far-reaching effects, not just on advertisers but also on website publishers, including media companies that rely on search traffic for revenue. Analysts say these developments underscore increasing legal and operational risks for Google, potentially affecting investor sentiment.
Market Implications for Google
Following news of the EU letter, Google’s stock has shown signs of pressure as investors weigh regulatory risk against growth prospects. Any measures that restrict Google’s auction practices or transparency could influence ad revenues, a key contributor to the company’s overall earnings.
Industry observers note that while Google has successfully navigated past antitrust challenges, continued scrutiny in both the EU and U.S. signals a more complex environment for digital advertising. Advertisers may face higher costs or reduced efficiency if regulatory actions force Google to alter auction rules, further complicating the company’s market outlook.
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