Shares in Alphabet (GOOGL) fell during early trading on Friday as the U.S. tech giant responded to the European Union’s recent $3.4 billion fine, emphasizing that it will not divest its online advertising business.
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The response came a day after the bloc, in a separate case, launched an investigation into how Alphabet’s Google ranks publishers and news sites’ content on its search engine.
Google Proposes Changes to AdTech Business
In a blog post published on Friday, Google disclosed that it has submitted a proposal to the European Commission containing several tweaks it is willing to make to the advertising technology (AdTech) business. One such change is enabling publishers and advertisers who use its advertising management platform, Google Ad Manager, to set different minimum prices for different bidders when using Google Ad Manager.
“We are also proposing significant changes to address any suggestions of conflict of interest, including increasing the interoperability of our tools to give publishers and advertisers more choice and flexibility,” the tech company added.
What’s Behind the EU Fine?
In early September, the European Commission slammed a fine of €2.95 billion ($3.4 billion) on it for abusing its AdTech business by deliberately favoring its ad services over those of its competitors. Teresa Ribera, the bloc’s competition chief, suggested that selling parts of the business was one way Google could end this conflict of interest.
The Commission, which is the executive arm of the EU and its market competition watchdog, emphasized that Google risks more decisive actions from the bloc if it does not put forward a case on how it will comply with its regulation within the next 60 days. Google, in response, described the fine as “unjustified,” noting that it will appeal the case.
Google Avoids ‘Disruptive’ AdTech Business Break-Up
Earlier reports had indicated that Google would not give in to the pressure to sell its control of the advertising management platforms Ad Manager, AdX exchange, and DoubleClick for Publishers.
In its latest statement, the California-based company noted that such a “disruptive” measure “would harm the thousands of European publishers and advertisers who use Google to grow their business.” The tech company argued that its proposal fully addresses the competition watchdog’s concerns while minimizing disruption to businesses’ activities.
Google is fighting a similar case back at home, even as it recently secured a victory against U.S. authorities in a case relating to its control over the search engine market.
Is Alphabet a Good Stock to Buy?
Turning to Wall Street, Alphabet’s shares currently enjoy a Strong Buy consensus rating from analysts. This is based on 30 Buys and seven Holds issued by analysts over the past three months.
At $312.29, the average GOOGL price target implies more than 12% upswing potential from the current trading level.
