Thursday, 21 March 2019 05:35

EU hits Google with fine for abuse of AdSense service Featured

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EU competition commissioner Margrethe Vestager: "Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anti-competitive contractual restrictions on third-party websites." EU competition commissioner Margrethe Vestager: "Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anti-competitive contractual restrictions on third-party websites." Courtesy European Union

The European Commission has hit search giant Google with a third fine, related to abuse of its AdSense advertising service, and told the company to fork out €1.49 billion (A$2.38 billion) for breaching EU anti-trust rules.

The EC, the executive arm of the European Union, said on Wednesday that Google had abused its market dominance by imposing restrictive clauses on agreements it made with third-party websites, preventing its rivals from advertising on these sites.

European competition commissioner Margrethe Vestager said in a statement: "Today the Commission has fined Google €1.49 billion for illegal 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 by imposing anti-competitive contractual restrictions on third-party websites.

"This is illegal under EU anti-trust rules. The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate, and consumers the benefits of competition.”

The EC said AdSense worked as an intermediation platform for online search advertising and Google was, by a big margin, the biggest player in the European Economic Area with market share of more than 70% between 2006 and 2016.

google adsense

"In 2016, Google also held market shares generally above 90% in the national markets for general search and above 75% in most of the national markets for online search advertising, where it is present with its flagship product, the Google search engine, which provides search results to consumers," it said.

Competitors, such as Microsoft and Yahoo!, were unable to sell advertising space in Google's own search engine results pages and, thus, third-party websites constituted an an important entry point for them to increase their market share and try to compete with Google.

The Commission said it had reviewed hundreds of agreements between Google and major publishers in the course of its investigation and found that:

  • "From 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
  • "As of March 2009, Google gradually began replacing the exclusivity clauses with so-called 'Premium Placement' clauses. These 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. As a result, Google's competitors were prevented from placing their search adverts in the most visible and clicked on parts of the websites' search results pages.
  • "As of March 2009, 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, and therefore clicked on, competing search adverts could be."

The AdSense fine has been expected since November 2017.

The EU has already imposed two, much larger, fines on the search firm. In July last year, the EU fined Google €4.3 billion for allegedly breaching anti-trust rules over its Android mobile operating system. Google has challenged this fine.

In June 2017, Google was fined €2.42 billion for allegedly abusing its search engine dominance to give illegal advantage to its own comparison shopping service. The company has appealed against this fine too.

Graphic: courtesy European Commission

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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