EC Fines Google $1.7 Billion for Illegal Search Ad Practices
Google breached EU antitrust law by hampering rivals from placing search advertisements on websites, the European Commission said. It fined the company 1.49 billion euros, the third time it slapped massive penalties on Google for abusive behavior. The almost $1.7 billion fine takes account of the seriousness and long duration of Google's actions (2006-2016), said Competition Commissioner Margrethe Vestager at a Wednesday briefing. She acknowledged the company has made positive changes to its conduct related to Search and Android. Google said it will continue to give rivals more visibility.
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Websites such as newspapers or travel site aggregators often have a search function embedded that, when clicked by users, delivers search results and ads, the EC said. Through AdSense for Search, Google offers search ads to owners of third-party "publisher" sites, acting as a broker between advertisers and website owners who want to profit from their search results page.
Google's share in online search ad intermediation in the European economic area was over 70 percent 2006-16, the EC said. Since rivals in online search ads such as Microsoft and Yahoo can't sell advertising space on Google's own search engine results pages, they and other third-party sites are a key entry point for other suppliers of online search ad brokers to try to compete.
Google used contract clauses to block competitors, Vestager said. An exclusivity clause the company began using in 2006 barred publishers from putting on their search results pages any search ads from rivals. "Premium Placement," introduced in 2009, required publishers take a minimum of search commercials from Google and place them on the most clicked-on and profitable parts of their search results pages. The company started requiring sites get written approval before changing how rival ads are displayed, meaning Google could control how attractive competing spots could be. Google stopped using the provisions after the EC issued its July 2016 statement of objections, and must now end any remaining illegal conduct and refrain from doing anything with similar effect.
Google has "always agreed that healthy, thriving markets are in everyone's interest," said Senior Vice President-Global Affairs Kent Walker. He noted the company "made a wide range of changes" to address EC concerns, and "over the next few months, we'll be making further updates to give more visibility to rivals in Europe."
One such change is a new format for Google Shopping announced Tuesday. The system offers direct links to comparison shopping sites and specific product offers from merchants, Walker blogged. After the EC's July Android decision (see 1807180003), the company changed the licensing model for apps it builds for Android use. It's now giving users of existing and new Android devices in Europe the chance to select the browser and search apps they want.
The company cleaned up its act, Vestager said. When the 2017 Google Shopping decision was issued (see 1706270001), the company automatically was putting its own shopping service at the top of its search results. Since then, it had to treat competing services the same as its own, and now around 70 percent of shopping units include at least one rival, she said. The Android decision led to device makers being able to pre-install apps and services of competing search and browser providers, she said.
The EC "must now ensure and enforce an effective, compliant remedy sadly lacking" in its earlier two decisions, warned FairSearch counsel Thomas Vinje. The large fine, "which took years of investigation to reach, is only miniscule compared to the big picture and will have little effect," emailed Initiative for a Competitive Online Marketplace Chairman Michael Weber. He urged the EU and governments to "step in and address" underlying wrongs such as tying or bundling of Google with web browsers and mobile operating systems.