In its 18 September 2024 ruling, the General Court of the European Union annulled the €1.5 billion fine that the European Commission had imposed on Google in 2019 for allegedly abusing its dominant position in online search advertising intermediation services. In its prohibition decision, the Commission had concluded that a number of clauses in Google’s contracts with third-party websites prevented Google’s rivals from placing their own search adverts on those websites, and therefore stifled competition in the online search advertising market between 2006 and 2016. Google applied to the General Court to annul the Commission’s decision.
This latest ruling is notable for clarifying the application of exclusivity obligations under Article 102 of the Treaty on the Functioning of the European Union (TFEU) and reinforcing the stringent evidentiary requirements the Commission must meet to demonstrate anticompetitive effects.
Legal Background
The case centred on the European Commission’s claim that between 2006 and 2016, Google included restrictive clauses in its contracts with third-party websites. The Commission argued that these clauses limited the ability of websites to display advertisements from competing advertising networks, thereby foreclosing competition and consolidating Google’s dominance in the market. In 2016, following complaints from Microsoft, Expedia and others, the Commission initiated proceedings and later found that these contractual terms amounted to a single and continuous infringement of Article 102 TFEU. The Commission imposed a fine of €1.5 billion on the company. Google removed or amended the relevant clauses in 2016.
The General Court’s Ruling
In its 18 September 2024 ruling, the General Court annulled the €1.5 billion fine, finding that the Commission had committed errors in its assessment of both the duration and impact of the restrictive clauses. Although the Court upheld the majority of the Commission’s findings, it determined that the Commission had failed to establish that the contractual clauses in question — either individually or collectively — constituted an abuse of dominance.
- Failure to prove foreclosure: The General Court criticised the Commission for not adequately demonstrating that the clauses had a foreclosure effect. Specifically, the Court found that the Commission did not provide sufficient evidence that the clauses deterred publishers from sourcing advertisements from Google’s competitors or prevented those competitors from accessing a substantial part of the market.
- Errors in assessing clause duration: The Court noted that the Commission’s assessment of the duration of these clauses was flawed. It found that many publishers were subject to the clauses for only a few years at a time, even if their contracts were extended or renewed. The Commission treated these contracts cumulatively, however, without properly examining whether publishers had opportunities to negotiate with Google’s competitors during these renewals or had unilateral termination rights.
- Lack of specific data for 2016: The Court pointed out that the Commission’s analysis lacked data specific to the year 2016, the final year of the alleged infringement. The Commission had not established that the restrictive clauses were capable of the same foreclosure effect in 2016 as in previous years, a crucial factor given that Google had made changes to these clauses by that point.
Key Takeaways
The General Court’s decision underscores the high standard of proof required to establish exclusionary conduct. The Court found that the Commission failed to substantiate claims that Google’s AdSense contracts foreclosed competition, deterred innovation, or harmed consumers. The Commission now has a short window in which to appeal this judgment to the European Court of Justice.
For businesses that may hold a dominant position in a relevant market, this ruling serves as a reminder to carefully structure contractual restrictions and exclusive arrangements, especially where they could be perceived as foreclosing competitors. While the Commission and other antitrust agencies will continue to scrutinise such practices, the judgment shows that regulatory decisions can be successfully challenged if there are evidentiary shortcomings.
This ruling marks yet another chapter in Google’s antitrust battles. On 10 September 2024, the European Court of Justice upheld a €2.42 billion fine imposed by the Commission in the Google Shopping case: the EU’s highest court confirmed a finding that Google had abused its dominant position by favouring its own comparison-shopping service in search results while unfairly demoting results from competing services. Google’s appeal to the European Court of Justice against the General Court’s 2022 ruling, which largely upheld the European Commission’s 2018 decision that Google had abused multiple dominant positions related to the Android mobile operating system to strengthen its dominance in web search, is still pending.
Google is also being investigated by the European Commission for potential non-compliance with the Digital Markets Act (DMA). On 25 March 2024, the Commission opened investigations into Alphabet's rules on steering in Google Play and potential self-preferencing in Google Search. The investigation aims to determine whether Alphabet's restrictions on app developers' ability to "steer" users to offers outside Google Play violate Article 5(4) of the DMA. Additionally, the Commission is examining whether Google's display of search results unfairly favors its own services (e.g., Google Shopping, Google Flights) over competitors, which could breach Article 6(5) of the DMA.
Google remains under intense scrutiny globally, including in the US, where it is facing its second major trial in less than a year for allegedly stifling competition in online advertising. In an earlier nine-week bench trial in the United States, District of Columbia district court judge Amit Mehta ruled on 5 August 2024 that Google illegally maintained its monopoly in markets for general search services and general search text advertisements in violation of Section 2 of the Sherman Antitrust Act. For more information on that ruling, see our client alert here.
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