Why Has Google Won its Appeal Against the EU AdSense Fine?

Over five years ago, in March 2019, the European Commission imposed a penalty on Google of more than €1.49 billion for breaching EU antitrust rules.

It found that the US giant had abused its dominant market position by imposing a series of restrictive clauses in contracts with third-party websites that prevented Google’s rivals from placing their search ads on those websites, as the EU body explained.

However, the EU’s General Court has overturned that sanction. ‘The General Court upholds most of the Commission’s findings, but annuls the decision by which the Commission imposed a fine of almost €1.5 billion on Google for, among other reasons, failing to take into account all the relevant circumstances in its assessment of the duration of the contractual clauses which the Commission found to be unfair,’ the court said in a statement.

Reasons for the fine

It should be recalled that the Commission began investigating these practices by Google following a complaint lodged by a German company with the German Federal Cartel Office, which was transferred to the European Commission. In the following years, additional complaints were filed by other companies, such as Microsoft, Expedia and Deutsche Telekom.

This led the EU institution to initiate proceedings concerning three clauses contained in the ‘Google Services Agreement’ (GSA), referred to in the judgment as ‘exclusivity clause’, ‘placement clause’ and ‘prior authorisation clause’, as they restricted or prohibited the display of ads from services competing with AdSense For Search (AFS).

The Commission found that these clauses had the potential to exclude services competing with AFS from the market. As a result, Google removed or modified these clauses in September 2016.

However, the Commission’s investigation concluded that Google had committed three separate infringements which together constituted a single continuous infringement from January 2006 until September 2016. It therefore imposed a fine of €1,494.5 million on the US company in March 2019.

Why did Google win?

Google appealed that decision and now the European General Court has ruled in its favour, annulling the fine.

While upholding most of the Commission’s findings, it concludes that it made errors in its assessment of the duration of the clauses in question, as well as the market they covered in 2016.

Thus, it considers that the Commission has not shown that the three clauses identified each constituted an abuse of a dominant position and that they constitute a single continuous infringement as a whole. It therefore annuls the Commission’s decision in its entirety.

In particular, the General Court considers that the Community body has not shown that the clauses were capable of dissuading publishers from using intermediaries competing with Google or that they were capable of preventing those intermediaries from gaining access to a significant part of the market for online advertising intermediation for internet search in the European Economic Area (EEA).

It therefore considers that it is not established that those clauses could have had the exclusionary effect alleged in the Commission’s decision, which is now being challenged.

Furthermore, the General Court explains that the Commission did not take into account all the circumstances. For example, it points out that many of the GSAs to which those publishers had been subject had a duration of only a few years, even if they had subsequently been renewed or extended, sometimes several times.

It thus criticises the Commission for having taken into account only the cumulative duration of the GSAs to which those publishers had been subject, without also verifying whether the publishers had had the opportunity to have recourse to intermediaries competing with Google during the negotiation of any renewal or extension of those GSAs or where the publishers enjoyed a right of unilateral termination.

Moreover, the General Court concludes that the Commission has failed to show those clauses could have had an exclusionary effect at the time when the decision was taken, owing to the absence of specific data relating to that year.

It also finds that the institution did not prove that the clauses deterred innovation, helped Google to maintain and strengthen its dominant position in the national online advertising markets or harmed consumers.