Google fined €1.5bn by EU for ‘illegal’ online ad contracts

Google

Google is on the receiving end of a €1.5bn (£1.28bn) fine from European regulators over antitrust violations within the online advertising marketing, making it the third fine to be issued by the watchdog in two years.

The fine was linked to its AdSense service with the EU saying that the terms it forced on companies were unfair, including preventing rivals from appearing in online search ads from “exclusivity contracts” with publishers.

These contracts evolved between 2006 and 2009 and a "premium placement" clause which prevented rivals' ads from being placed in certain ad spots.

“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,” said Competition Commissioner Margrethe Vestager.

“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 €1.5bn fine is the third that the EU commission has made against Google in the past two years.

Last year, it brandished the ad giant with a €4.3 fine relating to its Android mobile operating system that was used to unfairly undercut rivals in the mobile phone market and a €2.4bn fine for promoting its own shopping service over rivals.

Google's pre-tax profits in 2018 were £23bn, up from £9.66bn in 2017.

However, in anticipation of the fine today (20 March) Google announced an update to its Android product which is said was aimed at “supporting choice and competition in Europe”. Soon, it will proactively ask Android users which browser and search apps they would like to use rather than having Google as the default.

The tech giant is under mounting pressure from regulators regarding its practices.

In the past few weeks, US presidential candidate Elizabeth Warren proposed that Google be classified as “platform utilities,” meaning that it could not both own the platform and be a participant on it. Google’s ad exchange and businesses on the exchange would be split apart, she said, and Google search would have to be spun off.

And in the UK, chancellor Phillip Hammond has called on the Competition and Markets Authority (CMA) to launch an investigation into the £13bn market dominated by the so-called duopoly.

Hammond’s probe was announced in wake of a report conducted for the Treasury by Jason Furman, Barack Obama’s chief economic adviser, which said the digital advertising market is “dominated by two players and suffers from a lack of transparency”.

Earlier this week, the gatekeeper of Google's $100bn advertising business Prabhakar Raghavan spoke exclusively on The Drum on regulation and data privacy and what it means for Google's ad products moving forward. Read the interview here.

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