Search engine giant, Google, has been fined for anti-competition activities which affected online search advertisers. The company was accused of using its market dominance to dictate activities of rival online search advertisers in 2006 and 2016, through its AdSense clauses.
Restricting third-party rivals from displaying search ads is a form of market control which is illegal under European Union anti-trust rules. Google was fined N613.1 billion (€1.49 billion) by the European Union (EU), making it the third EU fine for the search and advertising giant in two years.
Previous fines: Last year, the EU competition authority hit Google with a record €4.34 billion fine for using its popular Android mobile operating system to block rivals. This followed a €2.42 billion fine in 2017 for hindering rivals of shopping comparison websites.
According to the European Commissioner for Competition, Margrethe Vestager:
“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 ANTI-TRUST RULES.”
The area the fine covers
Google AdSense fine: Google was accused by the EU of acting as an intermediary or an advertising broker.
How Google monopolised Ad placement: It was stated that In 2006, Google started to include “exclusivity clauses” in contracts which stopped publishers from placing ads from Google’s rivals such as Microsoft and Yahoo on search pages, the Commission said
According to the European Commission, websites often had an embedded search function. When a consumer uses this, the website delivers both search results and search adverts, which appear alongside the search result. It was reported that Google’s “AdSense for search” product delivers those adverts for website publishers.
The commission said from 2009, Google started replacing the exclusivity clauses with “premium placement” clauses, which meant publishers had to keep the most profitable space on their search results pages for Google’s adverts and they had to request a minimum number of Google adverts.
Before making any changes to how rival ads were displayed, Publishers needed to get written permission from Google. This gave Googlecontrol of how attractive competing search adverts should be and positioned; this usually determines the clicks.
“GOOGLE’S RIVALS, THEY WERE UNABLE TO GROW, AND TO COMPETE, AND AS A RESULT OF THAT, WEBSITE OWNERS HAD LIMITED OPTIONS FOR SELLING ADVERTISING SPACE ON THOSE WEBSITES, AND WERE FORCED SOLELY TO RELY ON GOOGLE.
“THERE WAS NO REASON FOR GOOGLE TO INCLUDE THESE RESTRICTIVE CLAUSES IN THEIR CONTRACTS, EXCEPT TO KEEP RIVALS OUT OF THE MARKET.”
Google adjust AdSense contracts
The European Union fine is believed to have forced Google to adjust and changed its AdSense contracts with large third parties, giving them more leeway to display competing search ads.
Google had more than 70 per cent of the search intermediation market in the EU between 2006 to 2016. The tech company had more than 90 per cent of the search market and more than 75 per cent of the online search advertising market, the Commission added.
Google parent company, Alphabet makes large amounts of money from advertising – pre-tax profits reached $30.7 billion (£23 billion) in 2018, up from $12.66 billion in 2017.