Tue. Apr 23rd, 2019

Brussels imposes Google a fine of 1,490 million for its advertising business | Economy

Brussels imposes Google a fine of 1,490 million for its advertising business | Economy



The Commissioner of Competition, Margrethe Vestager.

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The European Commission has imposed a fine of 1,490 million euros on Google for the overwhelming dominance of the technological giant in Internet advertising. The case refers to its AdSense advertising service, which sells advertising spaces on third-party websites. The company justifies that the volume of business in this division is minimal, it is in decline and that it is willing to make changes to adjust it to the concerns of Brussels. Even so, the competition commissioner, Margrethe Vestager, has concluded that the company's "misconduct" has lasted more than ten years and prevented other companies "the possibility of competing" and of "innovating". It is the third setback for an antitrust case against Google, which has already added three sanctions in just two years, amounting to 8,240 million.

If a user searches on Google what have been the largest fines ever imposed by Vestager, the answer you would find would be that it has been, precisely, Google, the same company whose search engines will take you to the information on these sanctions. Google has been in the crosshairs of the Commission in the last decade. And this Tuesday has closed the last of the fronts that had pending with a fine of 1,490 million euros for imposing "restrictive clauses" in contracts with websites of third parties that prevented their rivals from placing search ads on those pages.

Google AdSense is part of the advertising business on-line that has the technological giant. It gives website owners the opportunity to insert ads in specific gaps in their pages, in exchange for receiving revenue if those ads subsequently generate visits to advertisers. Google, for its part, auctions all those spaces on private pages among potential advertisers. Brussels considers that the company has abused its dominant position in this business and has put sticks in the wheels of its competitors to prevent its rivals from operating.

Abusive clauses in contracts

The file to Google for its overwhelming dominance of advertising on-line -About practically 80% of the market- was opened by the previous holder of Competition, Joaquín Almunia. The US company brushed the closure of the case after making three offers to the European Commission. However, it failed to do so and in 2016 it decided to open a formal investigation. The company has been arguing that Google AdSense is only a very small part of advertising revenue, which continues to fall due to the push of other business units.

However, Vestager has considered that, in part, Google has achieved this market dominance by imposing "anticompetitive contractual restrictions on third-party websites". That is, other websites will display advertising of their competitors. AdSense, in particular, acted as an intermediary for websites of online retailers, telecommunications operators or media that have search engines with results that incorporate advertisements.

According to Competition, Google strengthened its market dominance since 2006 by imposing exclusivity clauses in its contracts with third parties, and as of 2009, including others that it called premium, which ensured the most profitable spaces for your ads, and a commitment that those web pages would show you any change in the way you show an opponent's ad. "There was no reason for Google to include these restrictive clauses except to keep their competitors apart," Vestager said.

The European Commission closes, at least for the time being, all the fronts that it kept open in the battle it started in 2009 against the American technological giant. In 2017 Brussels imposed on Google a fine of 2,450 million euros as it took advantage of its dominant position in the Internet search market to also cover the sector of product comparators. A year later, the Californian company was sanctioned with 4.340 million euros after Competition concluded that imposed restrictions on Android manufacturers. Today's is the lowest: corresponds to 1.29% of the company's business volume in 2018.
However, it leaves for the company all the podium of the biggest sanctions imposed by the European Commission.

Changes due to previous fines

The American company appealed both decisions, but decided to abide by them. The vice president for Global Affairs of Google, Kent Walker, explained in a note that in 2017 he decided to adapt Google Shopping to respond to the requirements of Competition. "We have recently started to test a new format that offers direct links to other shopping comparators, along with product offers specific to merchants," he said.

In the case of Android, the company maintains that users have always been able to download the applications or search engines they want, independently of those that were already pre-installed. Google estimates that each user adds about 50 more applications to their device. However, following the decision of the European Commission decided to change the licensing model, so it created different contracts for Google Play and search engines Google Chrome and Google Search.

According to company sources, in the next few months all European users will be asked through the Google Play application which search engine they want to use. The Commission, however, wants to tie the US giant short and periodically reviews that it complies with its rulings.

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