AtmosphereMade By Google, Los Angeles, USA - 17 Oct 2017

Google is facing yet another hefty antitrust fine in Europe.

Antitrust regulators for the European Union fined the search company 1.5 billion euros over what it found to be another set of violations to antitrust laws in the region covering online advertising practices up until 2016. Of particular issue for the European regulators is Google’s AdSense program, which surfaces paid ads for products related to a person’s search words, on Google’s main search page, but also on other web sites, like news and blogs, making the platform a broker, too.

Margrethe Vestager, European commissioner for competition, wrote in a statement that this type of advertising “is by far Google’s main source of revenue.” And its revenue is substantial, coming in at $136.2 billion in 2018, 85 percent of which came from advertising. With an already dominant market position in online advertising, the European Commission sees Google’s position as a broker through AdSense as freezing out potential competitors in the space, since it holds more than 70 percent of the ad broker market in Europe and has since 2006. Vestager said Google has “abused its dominance to stop web sites using brokers other than the AdSense platform.”

“There are high barriers to entry, which make it hard for new competitors to come in,” Vestager wrote. “Despite that, competition should be possible in this market. Different web sites can choose different brokers — and the same web site could use more than one broker, to provide different ads. Indeed, our investigation showed that many web sites had an interest to use more than one broker.”

The investigation focused on how Google enacted the use of AdSense with partners, noting brokerage contracts with major web sites or “direct partners” included provisions like exclusivity, prohibiting companies from sourcing ads elsewhere; minimum buys for search ads and demands that they be given the most visibility, and control of how the ads actually looked on a site, with Google demanding written approval the way any ads from “rival” brokers looked on a web site.

“These restrictive clauses lead to a vicious circle,” Vestager wrote. “Google’s rivals were unable to grow and compete. As a result, owners of web sites had limited options for selling advertising space on these web sites and were forced to rely solely on Google. And, as a result of that, Google benefited from network effects and became even stronger. There was no reason for Google to include these restrictive clauses in its contracts, except to keep its rivals out of the market.”

Google has since removed such clauses from ad contracts, but the commission’s fine covers the decade between 2006 and 2016, when they were in use.

Kent Walker, Google’s senior vice president of global affairs, wrote in a statement that the company has “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,” Walker added. “Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe.”

A Google spokesperson declined to say whether the company would appeal the decision.

These changes were, however, prompted by agitation from the European Commission, which has fined Google almost 7 billion euros in two previous decisions.

The first came in June 2017, with the commission finding that Google took “illegal advantages” with its online search dominance to ensure that its comparative shopping feature surfaced the products of Google advertisers, not necessarily the best, or best-priced, products. Google argued at the time that advertiser product only came up in its shopping search when they were “relevant” to a user and subsequently appealed the decision.

The second fine came around the same time last year, but was related to search on Google’s Android. The commission claimed that Google imposed restrictions of Android device manufacturers in order to ensure that search traffic on the phones went to Google. The company again said it would appeal the decision, arguing that the Android has “created more choice for everyone, not less.”

In a blog post the day before the most recent EU fine, Walker said Google has made a number of changes to its products, including AdSense, in recent years spurred by the commission. A new format is being tested now for its shopping comparison that links directly to other comparison shopping sites and there is a new licensing model for Google apps on Android phones, but no specifics were offered on changes to AdSense.

Nevertheless, Walker said the changes “demonstrate our continued commitment to operating in an open and principled way.”

For More, See:

News Media Pushing Back on Google Opposition to EU Copyright Changes

Media People: Richard Gingras of Google News

What to Watch: Regulation of Big Tech

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