Google slapped with €1.49bn EU antitrust fine over ad practices

20 Mar 2019212 Views

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European Commission accuses internet giant of abusing its dominant position in the market.

The European Commission (EC) has fined Google €1.49bn for alleged abusive practices in online advertising.

The search giant is alleged to have abused its market dominance by imposing a number of restrictive clauses in contracts with third-party websites. This is understood to have prevented rivals from placing search adverts on these websites.

The fine comes on the heels of the EC last year fining Google €4.34bn for using the market power of its Android operating system to block rival browsers and search apps.

In the latest instance, the EC said that 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.

The EC alleges that Google profited by forcing publishers to consent to exclusivity clauses that prohibited rival intermediaries from placing ads on various websites.

Exclusivity clauses

The EC said that AdSense for Search, the internet giant’s advertising intermediation platform used by publisher websites such as those of newspapers and blogs, took place via agreements that were individually negotiated with “exclusivity clauses” to the detriment of rival platforms such as Microsoft or Yahoo.

According to the EC, Google first imposed an exclusive supply obligation, which prevented competitors from placing any search adverts on the most commercially significant websites.

Then, Google introduced what it called its “relaxed exclusivity” strategy aimed at reserving the most valuable positions for its own search ads and controlling competing ads’ performance.

The EC said: “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.”

Margrethe Vestager, European competition commissioner, 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 anticompetitive 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.”

John Kennedy is an award-winning technology journalist who served as editor of Siliconrepublic.com for 17 years.

editorial@siliconrepublic.com