Alphabet's Google took a major step this year to end an EU antitrust investigation with an offer to sell its advertising marketplace AdX but European publishers rejected the proposal as insufficient, two people with direct knowledge of the matter said on Wednesday.

Google's lucrative ad tech business attracted EU regulatory scrutiny last year following a complaint from the European Publishers Council. The European Commission subsequently charged Google with favouring its own advertising services, opening its fourth case against the world's most-popular search engine.

Google has never before offered to sell an asset in an antitrust case, according to three lawyers involved in antitrust cases who did not have permission to speak publicly. The company is on trial in the U.S., fighting claims by antitrust authorities who seek to make Google sell its Ad Manager product, which contains AdX and Google's publisher ad server, known as DFP.

Publishers rejected Google's proposal because they want it to divest more than just AdX to address conflicts of interest due to its presence in almost all levels of the ad tech supply chain, the people said. They said the EU antitrust enforcer was aware of the offer.

"As we have said before, the European Commission's case about our third-party display advertising products rests on flawed interpretations of the ad-tech sector, which is fiercely competitive and rapidly evolving. We remain committed to this business," a Google spokesperson said.

The Commission declined to comment. The European Publishers Council did not respond to requests for comment.

AdX, or Ad Exchange, is a marketplace where publishers can make their unsold ad space available to advertisers for purchase on a real-time basis.

EU antitrust chief Margrethe Vestager last year suggested that Google divest its sell-side tools DFP and AdX to end conflicts of interest. Still, the Commission is unlikely to force Google to divest assets for now but may instead order it to stop its alleged anti-competitive practices in the coming months because of the complexity of the case, other sources have told Reuters.

They said a divestment order could come later if Google fails to comply with the first EU decision likely to be issued in the coming months.

Google's 2023 advertising revenue, including from search services, Gmail, Google Play, Google Maps, YouTube, Google Ad Manager, AdMob and AdSense, amounted to $237.85 billion or 77% of total revenue. It is the world's dominant digital-advertising platform.