EU hits Google with £1.3bn fine

Google was found in breach of European regulators antitrust laws for violating practices 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 websites.

The European Union (EU) fine of approximately £1.3 billion is the third significant charge Google has been penalised for unfairly skewing the search in favour of itself over its competition and consumers best interests.

Commissioner in charge of competition policy Margrethe Vestager said: ”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.

“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.”

• Read more Google fined £44m for GDPR breach

Based on a broad range of evidence, the Commission found that Google’s conduct harmed its competition and consumers and “stifled innovation”. It also found that Google’s rivals were unable to grow and offer alternative online search advertising intermediation services to those of Google.

“The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate” - Margrethe Vestager

As a result, options for monetising space on these websites were limited and owners were forced to rely almost solely on Google.

In a statement, Google senior vice president of global affairs Kent Walker said: “We’ve always agreed that healthy, thriving markets are in everyone’s interest.

“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.”

The Commission’s fine is 1.29% of Google’s turnover from 2018 and takes account of the duration and gravity of the infringement. In accordance with the Commission’s 2006 Guidelines on fines, 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 (EEA).

Google stopped the illegal practices a few months after the Commission issued in July 2016, however the decision requires Google to, at a minimum, stop its illegal conduct, to the extent it has not already done so, and to refrain from any measure that has the same or equivalent object or effect.

Breach of EU antitrust rules
The EU found Google’s practices a serious abuse of dominant market power.

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.

• Read more Media mogul calls for Google break-up amid calls for regulation

The decision concludes that Google has held the strongest position in the market for online search advertising intermediation in the EEA since at least 2006, based on Google’s very high market shares, exceeding 85%.

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.

In a blog post published yesterday Walker highlighted the efforts Google made with the European Commission recommendations on the functionality of products for “everyone’s interest.”

Walker said: “As a result, over the next few months, we’ll be making further updates to our products in Europe.”

The on-going changes have been in a direct response to formal concerns from the Commission.

He continued: “We’ve always tried to give people the best and fastest answers一whether direct from Google, or from the wide range of specialist websites and app providers out there today.

“These latest changes demonstrate our continued commitment to operating in an open and principled way.”

Finding the findings
The EU investigation found that Google included exclusivity clauses in its contracts from 2006 which resulted in prohibiting publishers from placing any search adverts from competitors on their search results pages.

“We’ve already made a wide range of changes to our products to address the Commission’s concerns” – Kent Walker

As of March 2009, it concluded that Google began replacing the exclusivity clauses with “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.

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.

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, the investigation found that Google could control how attractive and clicked on competing search adverts could be.

Fundamentally Google’s practises covered over half the market by turnover throughout most of the period.

The investigation concluded: “Google’s rivals were not able to compete on the merits, 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 also controlling how rival search adverts could appear.”

• Read more UK broadcasters combine to battle Facebook and Google