Wednesday 23 October 2019

Google fined €1.49 billion by EU Commission for blocking advertising rivals

Stock photo: Reuters
Stock photo: Reuters
Adrian Weckler

Adrian Weckler

The European Commission has imposed a €1.49bn fine on Google for restricting rivals’ ads on its search engine.

The new fine means that the EU has imposed financial penalties of €8.3bn on the tech giant in the last three years for multiple infractions.

“Today the Commission has fined Google €1.49 billion for illegal misuse of its dominant position in the market for the brokering of online search adverts,” said the EU’s competition commissioner Margrethe Vestager.

“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 fine has been calculated on the basis of the value of Google's revenue from online search advertising intermediation in the European Economic Area.

Google is also liable to face civil actions for damages that can be brought before the courts of EU member states “by any person or business affected by its anti-competitive behaviour”, according to the Commission.

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

Then in July 2018, the Commission fined Google €4.34 billion for “illegal practices regarding Android mobile devices” to strengthen the dominance of Google's search engine.

The reason for Google’s current fine was explained by the Commission in its ruling today. Websites such as newspaper websites, blogs or travel sites aggregators often have a search function embedded, the Commission said. When a user searches using this search function, the website delivers both search results and search adverts, which appear alongside the search result.

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.

“Google was by far the strongest player in online search advertising intermediation in the European Economic Area (EEA), with a market share above 70pc from 2006 to 2016,” said the Commission ruling. “In 2016 Google also held market shares generally above 90pc in the national markets for general search and above 75pc 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.”

Google’s chief legal officer, Kent Walker, has responded to the fine.

“We’ve always agreed that healthy, thriving markets are in everyone’s interest,” he said.

“We've already made a wide range of changes to our products to address the Commission's concerns. Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe.”

Reuters

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