European Union fined Google 1.49 billion euros for antitrust violations in online advertising

On Wednesday, European authorities fined Google 1.49 billion euros for antitrust violations in online advertising and it seems to be the third antitrust fine by the European Union against Google since 2017.

As per the regulators, Google had imposed unfair terms on companies that used its search bar on their websites in Europe. Google has been abusing its power in its Android mobile phone operating system, shopping comparison services, and now search adverts.

Last year, EU competition commissioner Margrethe Vestager had fined Google €4.34 billion for using its Android mobile operating system for unfairly keeping its rivals away in the mobile phone market. Two years ago, Google was fined 2.4 billion euros for unfairly favoring its own shopping services over those of its rivals.

Newspaper websites or blog aggregators usually have a search function embedded to them. When a user searches something on this search function, the website provides search results and search adverts that appear alongside the search result. Google uses AdSense for Search, that provides the search adverts to the owner of the publisher websites.

Google acts as an advertising broker, between advertisers and website owners that provide the space. AdSense also works as an online search advertising broker platform. Google has been at the top in online search advertising intermediation in the European Economic Area (EEA), with a market share of more than 70% from 2006 to 2016. Last year Google held nearly 75.8% and this year it’s already 77.8%. There is constant growth happening in Google’s search ad market.

And it is impossible for competitors such as Microsoft and Yahoo to sell advertising space in Google's own search engine results pages. So, they need to work with third-party websites to grow their business and compete with Google.

In 2006, Google had included exclusivity clauses in its contracts that prohibit the publishers from placing any search adverts from competitors on their search results pages. In March 2009, Google started to replace the exclusivity clauses with “Premium Placement” clauses. According to these clauses, the publishers had to reserve the most profitable space on their search results pages for Google's adverts and further request a minimum number of Google adverts.

This, in turn, affected Google's competitors as they got restricted from placing their search adverts in the most visible and clickable parts of the websites' search results pages.

It got more difficult for the competitors when Google included the clauses that would require publishers to seek written approval from Google before making any changes to the way in which the rival adverts were displayed. Google has control over how attractive the competing search adverts would be.

Google also imposed an exclusive supply obligation, which would prevent competitors from placing any search adverts on the most significant websites. The company gave the most valuable positions to its adverts and also controlled the performance of the rivals’ adverts.

European Commission found that Google's conduct harmed competition and consumers, and affected innovation. Google might face civil actions before the courts of the Member States for damages suffered by any person or business because of its anti-competitive behaviour.

To know more about this news, check out the official press release.

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