The European Commission has fined Google €1.49 billion ($1.7 billion) for abusing its dominant position in the market for online advertising—the third billion-dollar penalty it has imposed on the tech giant for hindering competition.
Announcing the fine, Margrethe Vestager, the EU’s antitrust czar, said that Google had violated antitrust rules by shutting its competitors out of the market for online search advertising by imposing restrictions on companies that used its search bar on their websites in Europe. Google had unfairly required websites that used its search bar to feature ads from Google’s advertising services over those of rivals.
“The €1.49 billion reflects the serious and sustained nature of Google’s infringement,” Vestager said. “The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate.”
Google stopped the practice after the regulator sent it a statement of objections in July 2016.
After the fine was announced Wednesday, Google said in a tweet that “healthy, thriving markets are in everyone’s interest.”
Regulators in the EU have been much more aggressive in their approach to large technology companies than their U.S. counterparts when it comes to anti-competitive practices, data protection and tax issues. They are now seen by many governments as a global model as more try to rein in the power of the tech giants of Silicon Valley.
The fine in this case came as a result of an investigation into the market for brokering online search advertising. Through its Adsense business, Google serves as a broker between advertisers and website owners that want to profit from the space around search engine results. But according to the commission, Google blocked its rivals from placing advertisements on third-party websites by imposing exclusivity clauses in AdSense contracts.
The commission found that Google was the biggest player in online search advertising intermediation in the European Economic Area (EEA)—the 28 countries of the EU plus Norway, Iceland and Liechtenstein—with a market share above 70 percent from 2006 to 2016.
In 2016 Google also had a market share of above 90 percent in the national markets for general search, and above 75 percent in most of the national markets for online search advertising.
“Google is by far the biggest advertising broker,” Vestager said. “Google’s rivals were unable to grow and compete. Websites and owners of websites had limited options for selling space on their websites other than Google.”
The commission found that Google was able to shut out competitors such as Microsoft and Yahoo. It investigated about 200 agreements between Google and the most commercially important website publishers. It found that the agreements contained clauses that restricted publishers from using search advertisements from Google’s competitors in their search results.
In 2009, Google replaced these exclusivity clauses with “premium placement” clauses that required publishers to reserve the most prominent space in their websites for Google’s search advertisements in their search results. Google also required publishers to seek written permission to make changes in the way competitors’ advertisements were displayed, the commission said. This effectively gave Google control over its rivals’ ads.
“There was no reason for Google to include these clauses in their contracts except to exclude rivals, Vestager said.
Vestager ordered Google to end all such restrictive clauses and commit to not introducing clauses with similar effect in the future.
The European Commission has now fined Google a total of €8.25 billion ($9.4 billion) for anti-competitive practices. The commission can fine a company it finds guilty of illegal conduct up to 10 percent of its global turnover.
Vestager said measures that the commission had taken against Google for antitrust abuses had yielded positive results. Referring to a ruling against Google in June 2017 that the search company had favoured its own results in online shopping searches, Vestager said that Google’s rivals now had 70 percent of the market compared to 30 percent two years ago.
She also highlighted a ruling from July 2018 that Google had abused its market position to require mobile phone makers to install Android and Google apps on their handsets. Vestager said that mobile phone makers were now able to strike contracts with other developers to install their apps.
“We’ve always agreed that healthy, thriving markets are in everyone’s interest,” Google tweeted after the announcement. “We’re pleased that @EU_Commission recognizes our efforts to comply with its rulings, and the changes we’re making in coming months to give more visibility to rivals in Europe.”
Google also said it would now allow users in Europe to switch to another web browser and search engine on Android. It also said that in order to allow for more competition when customers shop with Google, it would give other shopping sites more prominence in its search results.