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The EU Commission fines Google €1.49 billion for abusing its market dominance in online search advertising

The European Commission has just announced to have fined Google €1.49 billion for abusing its market dominance in the online search advertising intermediation market.

In particular, the Commission has firstly alleged that Google is dominant in the market for online search advertising intermediation in the EEA because of its very high market shares, exceeding 85% for most of the period (from 2006). The market is also characterised by high barriers to entry, which include very significant initial and ongoing investments to develop and maintain general search technology, a search advertising platform, and a sufficiently large portfolio of both publishers and advertisers.

It is not possible for competitors in online search advertising such as Microsoft and Yahoo to sell advertising space in Google’s own search engine results pages. Therefore, third-party websites represent an important entry point for these other suppliers of online search advertising intermediation services to grow their business and try to compete with Google.

With respect to the contested conduct, the Commission believes that Google has imposed a number of restrictive clauses in contracts with third-party websites, which prevented its rivals from placing their search adverts on these websites.

The Commission found that:

  • starting in 2006, Google included exclusivity clauses in its contracts and publishers were prohibited from placing any search adverts from competitors on their search results pages;
  • as of March 2009, Google gradually began replacing the exclusivity clauses with so-called “Premium Placement” clauses, which 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, its 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 included clauses requiring publishers to seek written approval from Google before making changes to the way in which any rival adverts were displayed.

In this context, the Commission found that Google’s conduct harmed competition and consumers, and stifled innovation. Its rivals were unable to grow and offer alternative online search advertising intermediation services to those of Google. As a result, owners of websites had limited options for monetizing space on these websites and were forced to rely almost solely on Google.

 

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