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Google's ad practices come under renewed EU fire

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Google's ad practices come under renewed EU fire

Margrethe Vestager - Photo EU Council

(BRUSSELS) - Google's comparison shopping and ads-related practices breach EU rules, the Commission said Thursday as it sent two statements of objections to the American Internet search giant.

In this supplementary 'Statement of Objections', the Commission has reinforced its preliminary conclusion that Google has abused its dominant position by systematically favouring its comparison shopping service in its search result pages.

Separately, the Commission also informed Google in a Statement of Objections of its preliminary view that the company has abused its dominant position by artificially restricting the possibility of third party websites to display search advertisements from Google competitors.

While acknowledging that Google had produced many innovative products that have made a difference to people's lives, Competition Commissioner Margrethe Vestager said "that doesn't give Google the right to deny other companies the chance to compete and innovate.

"Today, we have further strengthened our case that Google has unduly favoured its own comparison shopping service in its general search result pages. It means consumers may not see the most relevant results to their search queries. We have also raised concerns that Google has hindered competition by limiting the ability of its competitors to place search adverts on third party websites, which stifles consumer choice and innovation.

"Google now has the opportunity to respond to our concerns. I will consider their arguments carefully before deciding how to take both cases forward. But if our investigations conclude that Google has broken EU antitrust rules, the Commission has a duty to act to protect European consumers and fair competition on European markets."

The supplementary Statement of Objections outlines additional evidence to reinforce the Commission's preliminary conclusion that Google abused its dominant position by systematically favouring its own comparison shopping service in its general search results. The additional evidence relates to the way Google favours its own comparison shopping service over those of competitors, the impact of a website's prominence of display in Google's search results on its traffic, and the evolution of traffic to Google's comparison shopping service compared to its competitors. The Commission is concerned that users do not necessarily see the most relevant results in response to queries - to the detriment of consumers, and stifling innovation.

Google had argued that comparison shopping services should be considered together with services provided by merchant platforms such as Amazon and eBay. However, the Commission considers comparison shopping services and merchant platforms to belong to separate markets. Even if merchant platforms are included in the market affected by Google's practices, the Commission says comparison shopping services are a significant part of that market and Google's conduct "has weakened or even marginalised competition from its closest rivals".

Google and Alphabet have 8 weeks to respond to the supplementary Statement of Objections.

Adsense

The Commission has also sent a Statement of Objections to Google on restrictions that the company has placed on the ability of certain third party websites to display search advertisements from Google's competitors.

The Commission's preliminary view set out in today's Statement of Objections is that these practices have enabled Google to protect its dominant position in online search advertising. It has prevented existing and potential competitors, including other search providers and online advertising platforms, from entering and growing in this commercially important area.

Google places search ads directly on the Google search website but also as an intermediary on third party websites through its "AdSense for Search" platform ("search advertising intermediation"). These include websites of online retailers, telecoms operators and newspapers. The websites offer a search box that allows users to search for information. Whenever a user enters a search query, in addition to the search results, also search ads are displayed. If the user clicks on the search ad, both Google and the third party receive a commission.

The Commission considers at this stage that Google is dominant in the market for search advertising intermediation in the European Economic Area (EEA), with market shares of around 80% in the last ten years. A large proportion of Google's revenues from search advertising intermediation stems from its agreements with a limited number of large third parties, so-called "Direct Partners". The Commission has concerns that in these agreements with Direct Partners, Google has breached EU antitrust rules by imposing the following conditions:

The Commission takes note that, in the context of its antitrust proceedings, Google has recently decided to change the conditions in its AdSense contracts with Direct Partners to give them more freedom to display competing search ads. The Commission says it will closely monitor these changes in Google's practices to assess how they will impact the market.

Google and Alphabet have 10 weeks to respond to the Statement of Objections.

Further information is available on the Commission's competition website, in the public case register under the case numbers 39740 (Google comparison shopping) and 40411 (Google AdSense).


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