EU Fines Google $1.7 Billion For Freezing Out Competitors

Silicon Valley kingpin Google has been fined 1.49 billion euros ($1.7 billion) by the European Union for its “abusive” online advertising practices, per the Associated Press and NPR.

The European Commission alleged that Google broke EU antitrust regulations by preventing its competitors from working with companies partnered with Google. The fine centered around Google’s manipulation of AdSense online advertisements.

AdSense, a division of Google, brokers advertisements to appear in search results and on webpages across the internet. The ruling, in this case, was focused on one particular situation: when Google sells ads to appear above its search results on third-party sites. Google placed exclusivity clauses in the contract, preventing websites from selling ads on their page sold by Google’s competitors.

While Google slightly relaxed the exclusivity clauses in later years, they still retained the right to manipulate how competitors’ search ads might appear on the final webpage — including manipulating the size, color, and font of the advertisement used.

EU Commissioner Margrethe Vestager weighed in on the damaging effects of Google’s behavior.

“This is illegal under EU antitrust 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.”

On top of the fine, the ruling also means, as Vestager explained, that “anyone who has suffered damage because of Google’s behavior can also claim compensation from Google through national courts.”

EU's $1.7 billion antitrust fine not likely to hurt Google's business. It involves practices the company says it already ended, and it's just a fraction of the $31 billion profit its parent, Alphabet, made last year. https://t.co/4aLfoG0paC

— The Associated Press (@AP) March 20, 2019

This ruling is the third time Google has been fined in the past two years by the European Commission for failing to abide by antitrust regulations and fair competition policies. Taken together, the fines total over 9 billion euros.

Despite the massive value of the fine — the EU noted that it calculated the 1.49 billion euro figure based approximately on Google’s search revenue in Europe, and that it represents “1.29 percent of Google’s turnover in 2018” — it’s unlikely to slow the tech giant down significantly.

Google’s parent company, Alphabet Inc., raked in over $31 billion in revenues last year. Despite the new fine, its stock rose two percent on Wall Street Wednesday. The EU stated (per the AP) that Google still controls “more than 70 percent of the European market for selling ads that run alongside search results on third-party websites.” For its part, Google has downplayed the effects of the fine, and the practices that led to it.

“We’ve 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. Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe,” Kent Walker, Google’s senior vice president of Global Affairs responded.

Google has not yet made a decision on whether or not to appeal the fine. It is currently appealing the past two fines the EU levied.