Google Hit With $1.7 Billion EU Fine for "Abusive Practices in Online Advertising"

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This is the third and latest charge the Commission has brought against the Silicon Valley giant.

The European Union on Wednesday slapped a fine of 1.49 billion euros ($1.7 billion) on Alphabet's Google for breaching its antitrust rules, citing "abusive practices in online advertising."

It said the online giant abused the dominance of its search engine to block rivals from selling text ads on the search results that appear on third-party sites.

Wednesday’s fine is the third and latest charge that the Commission has brought against the Silicon Valley giant.

"Today the Commission has fined Google €1.49 billion for illegal misuse of its dominant position in the market for the brokering of online search adverts," said EU commissioner Margrethe Vestager, who is in charge of competition policy. "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 antitrust rules. The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate — and consumers the benefits of competition."

Said the Commission: "It is not possible for competitors in online search advertising such as Microsoft and Yahoo to sell advertising space in Google's own search engine results pages. Therefore, third-party websites represent an important entry point for these other suppliers of online search advertising intermediation services to grow their business and try to compete with Google."

The EU body highlighted that market dominance, as such, is not illegal under EU antitrust rules. "However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets," it said. "Today's decision concludes that Google is dominant in the market for online search advertising intermediation in the European Economic Areas since at least 2006. This is based in particular on Google's very high market shares, exceeding 85 percent for most of the period.... Google has abused this market dominance by preventing rivals from competing in the online search advertising intermediation market."

Kent Walker, Google's senior vp global affairs, said in a response: "We've always agreed that healthy, thriving markets are in everyone’s interest. We've already made a wide range of changes to our products to address the Commission's concerns. Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe."