Google has won a court battle with the European Union over a 1.5 billion euro ($1.7 billion) fine for stifling competition in online advertising, partly to atone for a heavy defeat last week in a separate ruling on abuse of monopoly power.
Judges at the EU’s General Court in Luxembourg have backed Alphabet Inc.’s appeal of a fine imposed in 2019, saying regulators were largely correct in their findings but made important mistakes in the investigation related to the timing of the alleged misconduct.
The European Commission has concluded that Google — as a dominant online advertising 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 to the bloc’s highest court, the Court of Justice.
The decision follows two court victories for antitrust chief Margrethe Vestager and her efforts to rein in Silicon Valley. Last week, she won a top court victory over Google’s attempt to avoid a 2.4 billion euro antitrust fine for favoring its own products in search results and Apple Inc.’s attempt to avoid a 13 billion euro Irish tax bill.
The EU case over Google’s AdSense service is the latest in a trio of court battles that have defined Vestager’s tenure, which is coming to an end after a decade.
EU regulators are targeting Google’s role as an advertising broker for websites, where its AdSense for Search product places ads on platforms including newspaper sites, blogs and travel websites.
When the Brussels watchdog fined Google €1.5 billion in 2019, it said Google’s contracts with websites prevented them from accepting search ads from rivals like Microsoft and Yahoo. When users entered queries into Google search boxes on websites, ads from such rivals were blocked. All of the contracts at issue were canceled in 2016, as the EU stepped up its investigation.
EU’s Mistakes
While confirming “largely the commission’s findings,” the judges in Wednesday’s ruling said regulators had erred in assessing the duration of the disputed terms, as well as the scope of the market they covered in 2016.
The court said the EU Commission “has not established that all three provisions it identified constitute an abuse of dominant position and together constitute a single and continuous violation” of antitrust rules.
At a hearing two years ago, Google lawyers described the EU’s 2019 penalty as a “criminal fine of very large proportions.”
Mountain View, California-based Google said Wednesday that it was “pleased that the court acknowledged the error in its original decision and reversed the fine. We will review the entire decision carefully.”
“This case concerns a very narrow subset of text-only search ads placed on certain publisher 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 consider possible further steps”.
The EU’s lawsuits against Google mark the centerpiece of Vestager’s efforts to curb the growing power of big tech companies. She has fined the Alphabet unit more than €8 billion so far and has also filed a fourth lawsuit against Google’s advertising technology business, suggesting the company should be broken up to allay antitrust concerns. A final decision on that investigation is still pending.
Following the EU’s lead, the US Justice Department has also taken over Google, and like Vestager, it is pushing to break up Google’s ad tech business, while a trial is underway across the Atlantic.
