European Court annuls €1.49 billion fine on Google
Google scored a major victory when the European Court of Justice overturned a €1.49 billion ($1.66 billion) fine imposed by the European Commission five years ago for breaching antitrust rules. The case, which focused on the tech giant's online advertising practices, has broad implications for the regulation of large tech companies in Europe.
Background to the case
The fine was imposed in 2019 for Google allegedly abusing its dominant position in online advertising by ordering third-party websites - websites that displayed ads alongside search results - to exclusively use its ads. The European Commission claimed that Google thereby restricted competitors' access to the market, leading to less choice for advertisers and website owners and thus higher prices for consumers.
The main problem was the so-called exclusivity clauses in Google's contracts, which were designed to prevent competitors from displaying similarly placed ads. The Commission argued that this behaviour harmed competition, hampered innovation and strengthened Google's monopoly position in the advertising market.
The European Court's decision
However, in its current judgment, the European Court of Justice concluded that the Commission had not shown sufficient evidence that Google's conduct actually harmed consumers or hindered innovation. The Court said that the Commission had erred in its assessment of the impact of these contractual clauses and therefore annulled the fine in full.
Although it is possible to appeal the decision to the Court of Justice of the European Union, an appeal could only involve legal issues, which reduces the chances of success.
Google's response and wider impact
Alphabet
GOOGGoogle welcomed the court's decision, recalling that it had already amended its contracts in 2016 - before the fine was imposed - to remove the problematic clauses. In a statement, the company said it was pleased that the court recognised the errors in the original decision and overturned the fine.
Despite this significant legal victory, Google continues to face intense scrutiny in both Europe and the United States. Last week, the company lost its final appeal in another antitrust case involving its comparison shopping engine, which also resulted in a hefty fine. In addition, Google is facing other digital advertising investigations, including an ongoing lawsuit with the U.S. Department of Justice and pressure from U.K. regulators who accuse Google of dominating the U.K. digital advertising market.
Wider impact on tech giants
The lifting of the fine represents an extraordinary victory for Google in a long-running battle with global regulators. The company has faced mounting pressure over the past decade, with the European Commission alone fining it a total of around €8 billion for antitrust violations. These cases have ushered in a new era of stricter oversight of tech giants such as Google, Amazon and Facebook.
While Google has won this battle, the wider war with regulators is still ongoing. With investigations and lawsuits still ongoing, this ruling is only a temporary victory in the long-running battle to regulate big tech companies.
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CNBC Source.