EU Court of Justice annuls Google’s €1.5 billion fine over AdSense case

The EU General Court has upheld most of the European Commission’s findings against Google/Alphabet for the abuse of a dominant position with Google AdSense for Search, but annulled the Commission’s decision to fine Google almost €1.5 billion, arguing, among other things, that it had failed to take into account all relevant circumstances in its assessment of the duration of the contractual clauses that the Commission had found to be abusive.

In particular, the Court considers that the Commission has not demonstrated that the clauses in question were capable of dissuading publishers from obtaining supplies from intermediaries competing with Google or that they were capable of preventing those competitors from accessing a significant part of the market for advertising intermediation in online search engines in the European Economic Area and, consequently, that those clauses were capable of producing the foreclosure effect found in the contested decision.

Google has operated an advertising platform called AdSense since 2003. Google developed various services for this purpose, in particular an online advertising intermediation service called AdSense for Search (Afs). Afs allowed publishers of websites containing integrated search engines to display advertisements linked to online searches that users could submit on those websites. In this way, the publishers could receive a share of the revenue generated by the display of those advertisements. To use Afs, publishers who generated sufficient revenue could, among other things, negotiate a “Google Services Agreement” (‘Gsa’) with Google. However, the Gsa contained clauses that limited or prohibited the display of advertisements from services competing with Afs.

In 2010, an initial German company filed a complaint with the German Federal Cartel Office, which was transferred to the European Commission. Between 2011 and 2017, other companies, including Microsoft, Expedia, and Deutsche Telekom, filed additional complaints. In 2016, the Commission initiated proceedings concerning three clauses in the GSAs (referred to in the judgment as the “exclusivity clause,” the “placement clause,” and the “prior authorization clause”). It indicated that these clauses could foreclose services that competed with AFS. In September 2016, Google removed or amended these clauses.

In March 2019, the Commission found that Google had committed three separate infringements which together constituted a single and continuous infringement from January 2006 to September 2016. It imposed a fine of €1.49 billion on Google, of which €130 million jointly and severally with its parent company Alphabet. With today’s judgment, the General Court, after confirming most of the Commission’s findings, concludes that the Commission erred in its assessment of the duration of the clauses at issue, as well as of the market covered by them in 2016. It follows that, according to the General Court, the Commission failed to demonstrate that the three clauses it identified each constituted an abuse of a dominant position and together constituted a single and continuous infringement of Article 102 TFEU. The General Court annuls the Commission’s decision in its entirety.