DealBook: Should Google Shrink to Save Itself?
Google reportedly weighs divesting a big ad business
As antitrust regulators turn up the heat, the company is reportedly considering a sale or spinoff of its third-party ad tech unit, Keach Hagey and Rob Copeland of the WSJ report, citing unnamed sources.
The context:
• The Justice Department has increasingly focused on Google’s third-party ad business, which was “built largely on the company’s 2008 acquisition of the ad-technology firm DoubleClick,” Ms. Hagey and Mr. Copeland write.
• Google’s ad-tech business consists of software used to buy and sell ads across the web.
• Critics say Google unfairly bundles these tools together and uses them to help its own services, like search and YouTube.
Some Google executives have discussed informally “whether the company should consider divesting its third-party ad tech business, according to people familiar with the situation,” Ms. Hagey and Mr. Copeland write. (A Google spokeswoman said there were no plans to divest the unit.)
Proponents of divesting the business note that the ad tech arm “has steadily declined in importance to Google overall since the DoubleClick purchase, while units like search and YouTube have soared.” That’s because web search traffic is stagnant, while mobile internet use is booming.
“For Google, a partial voluntary breakup of its advertising business might be preferable to whatever regulators come up with on their own,” Alex Webb of Bloomberg Opinion writes.