Photo: Spencer Platt (Getty)

European regulators fined Google €1.49 billion (or $1.7 billion) on Wednesday for abusing its dominance in the online advertising business by imposing restrictive and anticompetitive contracts on its European customers.

As American politicians continue to debate and weigh different regulatory and antitrust approaches to Silicon Valley’s titan tech companies, Europe’s regulators are setting a global standard on competition in an industry with many of the world’s largest and most powerful companies. In the U.S., Senator and Democratic presidential candidate Elizabeth Warren called for the break up of big tech earlier this month.

Advertisement

“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 antitrust commissioner Margrethe Vestager said on Wednesday. “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.”

Wednesday’s fine marks the end of a trio of European investigations into Google. Vestager fined Google $5.1 billion last year for using its Android mobile operating system for anticompetitive abuses. In 2017, she fined Google $2.7 billion for manipulating search results to favor its own shopping service.

Advertisement

Vestager noted that in response to the Android fine, Google has done a better job offering users choices for browsers and search engines.

“We’ve seen in the past that a choice screen can be an effective way to promote user choice,” Vestager said. “It is welcome that Google is stepping up its effort and we will watch closely to see how the choice-screen mechanism evolves.”

Advertisement

In a statement and press conference from Brussels, Vestager described Google’s transgressions that led to the latest fine.

Google’s AdSense, which Vestager called “by far the strongest player in online search advertising” in Europe, works when websites embed search functions and the results are displayed alongside advertisements where the revenue is split with publishers.

Advertisement

In contracts with customers reviewed by investigators, Google at various times prohibited any search advertisements from competitors like Microsoft or Yahoo, prohibited any competitors ads from displaying above their own and also required publishers to get written approval from Google before changing the way they handle advertisements from tech rivals.

“Google’s rivals were not able to compete on the merits, either because there was an outright prohibition for them to appear on publisher websites or because Google reserved for itself by far the most valuable commercial space on those websites, while at the same time controlling how rival search adverts could appear,” Vestager said. “Google’s practices amount to an abuse of Google’s dominant position in the online search advertising intermediation market by preventing competition on the merits.”

Advertisement

The antitrust commissioner described the “special responsibility” that market dominant companies have to not abuse their position by restricting competition.

“We’ve always agreed that healthy, thriving markets are in everyone’s interest,” Kent Walker, Google’s senior Vice President for global affairs, said in a statement following the fine. “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.”

Advertisement

European regulators are engaged in several more investigations into competition into the American-dominated tech industry and, if Vestager’s statements are anything to go by, Wednesday’s fines are hardly the end of the saga.

“We keep getting complaints from people who are concerned about how these markets work, so we will keep doing our job,” Vestager said. “For me, the most important thing here is to enable user choice.”

Advertisement