Google won a court fight with the European Union over a €1.5 billion ($1.7 billion) fine for thwarting competition for online ads, partly atoning for last week’s crushing defeat in a separate judgment for abusing its monopoly powers.
Judges at the EU’s General Court in Luxembourg backed the Alphabet Inc. unit’s challenge to a fine doled out in 2019, saying regulators were mostly correct in their findings but made key mistakes in their probe linked to the duration of the alleged wrongdoing.
The European Commission had concluded that Google — as a dominant online ad broker — illegally prevented rivals such as Yahoo Inc. and Microsoft Corp. from placing ads on third-party websites. Wednesday’s ruling can still be appealed at the bloc’s top tribunal, the Court of Justice.
The decision comes on the heels of two court successes for antitrust chief Margrethe Vestager and her bid to rein in Silicon Valley. Last week she won victories at the top court against Google’s attempt to avoid a €2.4 billion antitrust penalty for favoring its own product results on search and Apple Inc.’s bid to skirt a €13 billion Irish tax bill.
The EU’s case into Google’s AdSense service is the last of a trilogy of court disputes over cases that set the course for Vestager’s tenure, which is about to end after a decade.
EU regulators targeted Google’s role as an ad broker for websites, where the AdSense for Search product placed advertising on platforms including newspaper websites, blogs and travel sites.
When the Brussels watchdog hit Google with the €1.5 billion penalty in 2019, it said Google’s contracts with websites prevented them from accepting rival search ads from the likes of Microsoft and Yahoo. When a user would input a query on a Google search box on websites, ads from such rivals were blocked. The problematic contracts were all dropped by 2016, when the EU escalated the investigation.
EU Mistakes
Despite confirming “the majority of the commission’s findings,” judges in Wednesday’s ruling said that regulators blundered in their assessment of the duration of the disputed clauses, as well as the part of the market covered by them during 2016.
The EU commission “has not established that the three clauses it had identified each constituted an abuse of a dominant position and, together, a single and continuous infringement” of antitrust rules, the court said.
In a hearing two years ago, Google’s lawyers described the EU’s 2019 penalty as representing a “quasi criminal fine of very large proportions.”
Mountain View, California-based Google said on Wednesday it’s “pleased that the court has recognized errors in the original decision and annulled the fine. We will review the full decision closely.”
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“This case is about a very narrow subset of text-only search ads placed on a limited number of publishers’ websites,” the company said. “We made changes to our contracts in 2016 to remove the relevant provisions, even before the commission’s decision.”
The Brussels-based commission said it “will carefully study the judgment and reflect on possible next steps.”
The EU’s Google cases marked the centerpiece of Vestager’s efforts to crack down on the growing power of big tech companies. She’s fined the Alphabet unit more than €8 billion to date and has also launched a fourth case into Google’s advertising technology business, suggesting that the firm needs to be broken up to allay antitrust concerns. A final decision in that probe is pending.
Following the EU’s lead, the US Department of Justice has also taken on Google. Like Vestager, it’s also pushed for a breakup of Google’s adtech business, as a trial gets underway across the Atlantic.
