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Exactly where does Google make most of its money?

The view from Brussels

The European Commission has charged Google with abusing its dominant position in the advertising tech industry, mirroring a similar lawsuit filed by the US DoJ back in January.

The EC alleges that Google has exploited its control on both the buy side, assisting advertisers in securing ad placements, and the sell side, helping publishers fill their available ad space. That's essentially put the company in a position to dictate the meeting point of demand and supply.

Even though the charges relate to only a small part of Google's business, the prevailing view from Brussels is that a “structural remedy” is required, which could force Google to carve off parts of its behemoth ad business.

All about ads

Indeed, despite its many marvelous pieces of technology — Google Earth, its self-driving car project, Google Cloud — Alphabet still makes the vast majority of its revenue in the very same way that this humble newsletter does: advertising. Through serving billions of ads across Google Search, YouTube and the wider Google Network, Alphabet brought in a staggering $224bn in ad revenue last year — nearly 80% of the company’s total.

Google's dominance in the advertising realm is admittedly gradually diminishing. It currently captures 27% of all digital advertising revenue in the US — still the most of any company, but down from its 37% share in 2015. Meta holds the second position, but has seen a similar squeeze in its share. Amazon is the new major player, having quickly captured ~12% of the US market, as shoppers increasingly start their search for products on Amazon itself.

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