The European Commission has hit Google with a £1.27 billion fine, stating that the tech giant has abused its dominant position in the online search advertising market.
Commissioner Margrethe Vestager, in charge of competition policy, announced today that: “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.”
“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.”
Exclusivity Clauses
Following their investigation the EU Commission has found that the American tech multinational in 2006 placed ‘exclusivity clauses’ within its contracts which prohibited publishers from placing any search adverts from competitors on their search results pages.
Through AdSense for Search, Google provides publisher websites with search adverts and search functionality. In this function Google acts as an intermediary or as the commission calls them an ‘advertising broker, between advertisers and website owners that want to profit from the space around their search results pages.’
In 2009 Google began to replace the exclusivity clause with a ‘premium placement’ clause that required publishers to hold the most valuable advert spaces on their search results for Google’s adverts. The Commission found that: “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.”
These practices the Commission found covered over half of the market turnover in advertisement and this resulted in Google’s competitors not being able to compete on ‘Merit’ as the Commission notes Google’s rivals had imposed on them, in some cases, ‘outright prohibition’ on them appearing on publisher websites.
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The Commission also notes that: “Google reserved for itself by far the most valuable commercial space on those websites, while at the same time controlling how rival search adverts could appear.”
Google Fined £1.27 Billion Over Market Dominance Abuse
All of this was possible through Google’s market dominance, something the Commission points out is not illegal under EU antitrust laws, however companies are expected to not abuse their position by restricting competition.
The EU has stated today that: “Google has abused this market dominance by preventing rivals from competing in the online search advertising intermediation market.”
The EU has fined Google €1,494,459.000, this amount is equivalent to 1.29 percent of Google’s turnover in 2018.
In anticipation of the Commission’s ruling Google’s SVP of Global Affairs Kent Walker released a blog post in which he commented that: “We’ve been listening carefully to the feedback we’re getting, both from the European Commission, and from others.”
“As a result, over the next few months, we’ll be making further updates to our products in Europe. Since 2017, when we adapted Google Shopping to comply with the Commission’s order, we’ve made a number of changes to respond to feedback. Recently, we’ve started testing a new format that gives direct links to comparison shopping sites, alongside specific product offers from merchants.”
