EU Commission of Competition fines Google with a $1.7 billion for blocking competitors ads
According to Reid (2019) The European Union on Wednesday ordered Google to pay 1.49 billion euros ($1.69 billion) for stifling competition in the online advertisement sector.
The European Commission said Google had placed exclusivity contracts on website owners, stopping them from including search results from Google’s rivals. It said these clauses were replaced in 2009 by premium payments and in the same year, Google had asked publishers to seek permission on how rival ads were displayed.
The EU’s competition commissioner, Margrethe Vestager, said Google had prevented rivals from being able to “compete and innovate fairly” in the online ad market.
“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 antitrust rules,” Vestager said in Brussels.
In response, Google’s senior vice president of global affairs, Kent Walker said: “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.”
The Alphabet company has previously defended the use of its ad technology, claiming it had been in place since 2006, is now superseded, and is a minor product.
In the fourth quarter of 2018, Google’s core advertising business saw revenue increase 20 percent from the previous quarter to $32.6 billion — the same rate of growth as the last quarter.
The European Commission said between 2006 to 2016, Google was by far the strongest player in online search advertising in the European Economic Area, with a market share above 70 percent.EU versus Google
It is the third antitrust fine from Brussels against the search engine giant.
Last July, regulators in Brussels hit the Alphabet unit with a $5 billion fine for abusing the dominance of its Android mobile operating system.
Google lets phone makers use the open-source Android software for free, but the EU accused it of benefiting its own services, including forcing phone makers to bundle Google products like Search, Maps and Chrome with its app store, Play.
In a blog post-Tuesday, Walker said European Android customers will now be asked which apps they would like to use instead.
Vestager said Wednesday it was welcome news that Google was “stepping up its effort with the Android system” and the European Commission would watch to see how the improved choice unfolded.
In 2017, the EU fined Google $2.7 billion for favouring its shopping service over competitors.
In an interview with CNBC following the announcement, Vestager rejected any suggestion that the fines against Google would disrupt the relationship between Europe and the United States.
The competition supremo added that the commission had also imposed a number of fines on European companies.
“One should understand that you are more than welcome to do business in Europe but with our rule book and with no illegal behaviour,” she said.
Vestager has just 6 months left in her role but said her successor would enjoy the same strong mandate.
Reid, D. (2019). EU regulators hit Google with $1.7 billion fine for blocking ad rivals. [online] CNBC. Available at: https://www.cnbc.com/2019/03/20/eu-vestager-hits-google-with-fine-for.html