Google recently scored a legal victory as the European Union’s General Court overturned a €1.5 billion fine imposed in 2019. The penalty was initially issued after the European Commission accused the tech giant of abusing its dominance in the online advertising market through its AdSense service. However, the court found the Commission had made errors in its assessment, leading to the annulment of the fine.
Origins of the Case
The case revolved around Google’s AdSense for Search (AFS), which places Google search boxes on third-party websites and shares ad revenue with site owners. Between 2006 and 2016, Google was accused of including restrictive clauses in contracts with AdSense partners. These clauses allegedly prevented partners from displaying ads from competing services, thus solidifying Google’s dominance in the search advertising market.
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The European Commission, the EU’s competition watchdog, argued that these practices violated antitrust laws by limiting consumer choice and innovation in the advertising market. The resulting fine of €1.49 billion accounted for 1.29% of Google’s 2018 global revenue.
General Court’s Decision
On appeal, the General Court found significant flaws in the Commission’s analysis. It ruled that the Commission failed to consider the full context, especially the length of the contracts between Google and its AdSense partners. According to the court, the contracts were often short-term and subject to renegotiation, which could have allowed partners to seek alternative advertising providers.
The court ruled that the restrictive clauses did not unduly harm competition or entrench Google’s dominant position. As a result, the fine was annulled entirely. The European Commission has the option to appeal the decision to the EU’s highest court, the Court of Justice of the European Union (CJEU), but it has not yet announced whether it will do so.
History of EU Fines Against Google
This case is just one chapter in a long legal saga between Google and the European Union. Between 2017 and 2019, the EU fined Google a total of €8.2 billion for a series of antitrust violations. In 2017, Google was fined €2.42 billion for manipulating search results to favor its own comparison shopping service. The company lost an appeal of that case last week.
In 2018, Google faced its largest-ever fine of €4.3 billion for imposing illegal restrictions on Android smartphone manufacturers to ensure its dominance in mobile search. While the fine was slightly reduced to €4.1 billion in 2022, the General Court largely upheld the Commission’s decision.
Broader Implications for Big Tech
While Google successfully overturned the AdSense fine, its legal battles in Europe are far from over. The company continues to face scrutiny under the EU’s Digital Markets Act (DMA), which aims to regulate the behavior of large tech companies before their dominance can harm competition. Both Google and its rivals, like Meta and Apple, are already being investigated under the DMA for potential antitrust violations.
The US is also keeping a close eye on Google. In August, a US judge ruled that Google’s search business constituted an illegal monopoly, and the company is currently facing another major antitrust trial related to its dominance in the online ad tech market.
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In a related case, the General Court upheld a €242 million fine against US chipmaker Qualcomm. The company was found guilty of using predatory pricing to push out competition in the market for 3G baseband modem chips. While Qualcomm’s fine was slightly reduced, the company failed to escape the penalty entirely, marking a contrast to Google’s successful appeal.