The European Commission has fined Google €1.49 billion for breaching EU antitrust rules after concluding that company abused its market dominance by imposing a number of restrictive clauses in contracts with third-party websites preventing rivals from placing their search advertisements on these websites.
Many websites have an embedded search function. When a user searches using this search function, the website delivers both search results and search adverts, which appear alongside the search result. Google’s AdSense for Search service works as an online search advertising intermediation platform which, between 2006 and 2016, held a market share above 70% in the EEA as well as high market shares elsewhere. The Commission found that it is not possible for competitors 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 provision of these services to the most commercially important publishers took place via individually negotiated agreements and which included exclusivity clauses that prohibited publishers from placing any search adverts from competitors on their search results pages. Later, it used “premium placement” clauses which 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.
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 advertisements could be.
Google’s practices covered over half the market by turnover throughout most of the period, stifling competition, either because there was an outright prohibition for them to appear on publisher websites or because Google reserved for itself the most valuable commercial space on those websites, while at the same time controlling how rival search adverts could appear.
Accordingly, Google abused its market dominance by preventing rivals from competing in the online search advertising intermediation market. Potential competitors were unable to offer an alternative to Google so website owners had limited options for monetising space on their websites. Google did not demonstrate that the contractual clauses created any efficiencies capable of justifying its practices.
The European Commission’s fine of €1,494,459,000 (1.29% of Google’s turnover in 2018) takes account of the duration and seriousness of the infringement. It was calculated on the basis of the value of Google’s revenue from online search advertising intermediation in the EEA.
Google ceased its practices a few months after the European Commission issued a Statement of Objections concerning the case in July 2016.
Google may also face civil actions for damages that can be brought before the courts of the Member States by any person or business affected by its anti-competitive behaviour. The EU Antitrust Damages Directive 2014/104/EU makes it easier for victims of anti-competitive practices to obtain damages.
