The European Commission has fined Google $1.69 billion for breaching EU antitrust rules. “Google has abused its market dominance by imposing a number of restrictive clauses in contracts with third-party websites which prevented Google's rivals from placing their search adverts on these websites,” according to today’s press release from the EU Commission.
Commissioner Margrethe Vestager, in charge of competition policy, said the fine was for Google’s “illegal misuse of its dominant position in the market for the brokering of online search adverts. Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anti-competitive contractual restrictions on third-party websites. This is illegal under EU antitrust rules. The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate - and consumers the benefits of competition.”
The Commission fined Google $2.7 billion in 2017 and nearly double that amount in 2018, when it hit the company with a $5 billion fine. With today’s announcement Google has been fined nearly $9.4 billion.
This latest action started with the Commission’s Statement of Objections in July 2016 citing Google’s restrictions that the company placed on the ability of third-party websites to display search advertisements from Google’s competitors.
“Through AdSense for Search, Google provides these search adverts to owners of ‘publisher’ websites. Google is an intermediary, like an advertising broker, between advertisers and website owners that want to profit from the space around their search results pages. Therefore, AdSense for Search works as an online search advertising intermediation platform,” the EU Commission’s statement reads.
Google is by far the dominant player in online search advertising intermediation in the European Economic Area (EEA). The Commission determined that Google held 85% of the market for most of the period starting in 2006.
“It is not possible for competitors in online search advertising such as Microsoft and Yahoo to sell advertising space in Google's own search engine results pages. Therefore, third-party websites represent an important entry point for these other suppliers of online search advertising intermediation services to grow their business and try to compete with Google,” according to the press release. Further, the Commission said Google “did not demonstrate that the clauses created any efficiencies capable of justifying its practices.”
Google: We’re Making Changes Based on Feedback and Concerns
On March 19, Google’s SVP for Global Affairs Kent Walker said, “For nearly a decade, we’ve been in discussions with the European Commission about the way some of our products work. Throughout this process, we’ve always agreed on one thing 一 that healthy, thriving markets are in everyone’s interest.”
“A key characteristic of open and competitive markets 一 and of Google’s products 一 is constant change. Every year, we make thousands of changes to our products, spurred by feedback from our partners and our users. Over the last few years, we’ve also made changes 一 to Google Shopping; to our mobile apps licenses; and to AdSense for Search 一 in direct response to formal concerns raised by the European Commission. Since then, we’ve been listening carefully to the feedback we’re getting, both from the European Commission, and from others.”
This was the strongest case that the DG Comp [Dictorate-General Competition] had against Google because the law is very clear that exclusive agreements by dominant players are a violation of Article 102 of the Treaty on the Functioning of the European Union (TFEU), the EU's anti-monopolization law.
Google did not contest its dominance in the market. While it voluntarily dropped its exclusivity, Google took a couple of years. Of course, they probably don't need it anymore.
For Americans looking for a detailed opinion, something more than a press release, they will be disappointed. Details will likely be sparse. They don't operate with the kind of transparency Americans would expect. We will be left to read tea leaves.
