Google fined €1.49bn for 'abusive practices' in online advertising

The European Commission has fined Google €1.49bn for breaching EU antitrust rules. The commissi...
Jack Quann
Jack Quann

11.49 20 Mar 2019

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Google fined €1.49bn for 'abus...

Google fined €1.49bn for 'abusive practices' in online advertising

Jack Quann
Jack Quann

11.49 20 Mar 2019

Share this article

The European Commission has fined Google €1.49bn for breaching EU antitrust rules.

The commission said Google "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 sites.

Websites such as newspaper websites, blogs or travel sites aggregators often have a search function embedded.


When a user searches using this function, the website delivers both search results and search adverts.

Through AdSense for Search, Google provides these search adverts to owners of 'publisher' websites.

This makes Google an intermediary, like an advertising broker, between advertisers and website owners that want to profit from the space around their search results pages.

Google fined Source: European Commission

The commission explained: "Google was by far the strongest player in online search advertising intermediation in the European Economic Area (EEA), with a market share above 70% from 2006 to 2016.

"In 2016 Google also held market shares generally above 90% in the national markets for general search and above 75% in most of the national markets for online search advertising, where it is present with its flagship product, the Google search engine, which provides search results to consumers.

"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."

The commission reviewed hundreds of agreements, whereby intermediation services to the most commercially important publishers took place.

In the course of its investigation, it found that starting in 2006 Google included exclusivity clauses in its contracts.

This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages.

As of March 2009, Google began replacing the exclusivity clauses with so-called 'Premium Placement' clauses.

These required publishers to reserve the most profitable space on their search results pages for Google's adverts and request a minimum number of Google adverts.

"As a result, Google's competitors were prevented from placing their search adverts in the most visible and clicked on parts of the websites' search results pages", the commission found.

Google also included clauses requiring publishers to seek written approval from Google before making changes to the way in which any rival adverts were displayed.

This meant that Google could control how attractive, and therefore clicked on, competing search adverts could be.

Google fined European Competition Commissioner Margrethe Vestager speaks during a media conference at EU headquarters in Brussels | Image: Francisco Seco/AP/Press Association Images

The commission said: "Google's practices amount to an abuse of Google's dominant position in the online search advertising intermediation market by preventing competition on the merits.

"Market dominance is, as such, not illegal under EU antitrust rules.

"However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets."

The decision concludes that Google is dominant in the market for online search advertising intermediation in the EEA since at least 2006.

This is based in particular on Google's very high market shares, exceeding 85% for most of the period.

The market is also characterised by high barriers to entry - these include very significant initial and ongoing investments required to develop and maintain general search technology, a search advertising platform, and a sufficiently large portfolio of both publishers and advertisers.

"Google has abused this market dominance by preventing rivals from competing in the online search advertising intermediation market".

The commission said its fine of €1,494,459,000 - 1.29% of Google's turnover in 2018 - takes account of "the duration and gravity of the infringement."

The fine has been calculated on the basis of the value of Google's revenue from online search advertising intermediation in the EEA.

Google ceased the practices a few months after the commission issued a July 2016 Statement of Objections concerning the case.

The tech giant is also liable to face civil actions for damages that can be brought before the courts of member states by any person or business affected by anti-competitive behaviour.

This is not the first fine Google has faced from the EU over competition rules.

In June 2017, the commission fined Google €2.42bn for abusing its dominance as a search engine by giving an illegal advantage to Google's own comparison shopping service.

And in July 2018, it was ordered to pay €4.34bn for illegal practices regarding Android mobile devices to strengthen the dominance of Google's search engine.

Competition Commissioner Margrethe Vestager said: "Today the Commission has fined Google €1.49bn for 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."

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