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On March 20, the European Commission (EC) fined Google €1.49 billion for its abuse of a dominant position in the online advertising market through its service AdSense for Search.

AdSense for Search is a platform that provides search adverts for publisher websites. Google acts like an advertising broker between advertisers and website owners that want to profit from the space around their search results pages.

The investigation began in 2010 following a number of complaints from competitor platforms. According to the EC, from 2006 to 2016, Adsense was the leading advertising broker for online searches, with a market share of over 85% in the European Economic Area for most of the period.

The EC considered that Google’s practices were anti- competitive because it negotiated agreements individually with some of the leading commercial web publishers. Google first imposed an exclusive supply obligation, and then what it called a “relaxed exclusivity” strategy.

After reviewing Google’s agreements with its clients, the EC concluded the following:

  • Google included exclusivity clauses in its contracts from 2006, preventing publishers from placing search result adverts on their pages.
  • From March 2009, Google gradually 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.
  • 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 competing search adverts could be, and therefore how often they would be clicked on.

According to the EC, these conditions did not allow rivals to compete on their own merits in the market, because (i) they were prohibited from appearing on publisher websites, or (ii) Google reserved for itself the most valuable commercial space on those websites.

Announcing the decision, competition commissioner Margrethe Vestager said: “Today the Commission has fined Google €1.49 billion for unlawful 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.”

Google stopped its unlawful practices after the EC issued a statement of objections relating to the case in July 2016. The decision requires Google to stop the unlawful conduct to the extent that it has not done so already.

This is the third time that the EC has fined Google in just two years, although it is  the smallest fine (representing 1.29% of its 2018 turnover). In June 2017, the EC fined Google €2.42 billion (representing 2.86% of its 2016 turnover) for abusing its dominance as a search engine by giving an unlawful advantage to Google’s own comparison shopping service. In July 2018, it fined Google €4.34 billion (4.62% of its 2017 turnover), the highest fine in the EC’s history, for abuse of dominant position in the general online search market The EC found that it imposed unlawful restrictions on manufacturers of Android mobile devices and on mobile network operators.

As on previous occasions, Google has already confirmed that it will appeal the decision before the European courts. Google’s senior vice president of global affairs also confirmed that it would make the necessary changes to meet the EC’s demands and will make further updates to give more visibility to rivals in Europe.

In addition to the total of €8.25 billion accumulated by Google across the three fines, under the directive on actions for damages under competition law, the company may also face possible future civil suits before the national courts with affected companies seeking damages.  See our blog post for the most relevant aspects of the transposition of the damages directive into Spanish law.

You can read the EC press release here.

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mireia.prat@cuatrecasas.com

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