LUXEMBOURG (CN) — Google pushed back against Brussels’ conclusion that its advertising practices violated EU competition regulations in the second day of hearings before the European General Court on Tuesday.
Alphabet, Google’s parent company, is contesting a 1.49 billion euros ($1.6 billion) fine at the European Union's second-highest court. The penalty was handed down by the European Commission in 2019 after finding Google abused its near-monopoly in the internet search market to promote its AdSense product.
Arguments on Tuesday delved into the minutiae of the company's advertising contracts, including a 10-minute tangent focused on the definition of the word “adjacent.” Google lawyer Jack Williams warned the Luxembourg-based court as he began his arguments that the topics were “rather arid.”
The internet search giant has operated AdSense since 2003, acting as an intermediary between websites and ad buyers. One key feature is its search ads, which include ads above search results. Companies spend billions every year to place ads at the top of search results and Alphabet makes more than 80% of its annual revenue from advertising.
While investigating Google for another alleged antitrust breach involving its shopping service, the European Commission – the EU’s executive branch – found evidence that the company was breaching EU antitrust regulations by demanding exclusivity contracts from websites that accepted its ads.
The commission cited a series of contract requirements, including restrictions preventing websites from placing rival advertising or limiting where rival ads could be placed. The Silicon Valley giant argues the commission “cherry-picked” certain contracts and clauses to paint the company in a negative light. Google contends the restrictions it placed on advertisers were not anticompetitive, but simply common business practice.
Commission lawyer Anthony Dawes disagreed, arguing that it wasn’t each individual contract that was a problem but rather the cumulative effect of the contracts.
“These exclusivity clauses covered 50% of the search ad market,” he said Tuesday.
Brussels assessed the fine based on a decade of alleged misconduct from 2006 to 2016. But one of Google's attorneys said it was a “really and seriously flawed” decision to consider this duration.
“I do not say that lightly,” lawyer Josh Holmes cautioned the five-judge panel. He argued it is the length of the relationship Google had with websites that hosted advertising that should be considered. According to the company's legal team, those contracts lasted an average of two years.
Three days of hearings opened on Monday. The two sides spent most of the first day arguing over whether Google truly had market dominance in the search ad space. Google contends that search ads and non-search ads, such as banner ads that appear as large images embedded on web pages, can be substituted for one another. The commission said they aren’t interchangeable, citing an analysis it conducted as part of its investigation in which it surveyed both publishers and advertisers to see how they made their advertising choices.
Google is currently fighting a total of more than $9 billion in fines for anticompetitive behavior before the EU court. In 2021, the General Court upheld a 2.4 billion euro ($2.5 billion) fine for abusing its internet search dominance to undercut competitors of its Comparison Shopping Service, a decision which Google has appealed. In 2018, the commission penalized the company 4.3 billion euros ($4.5 billion) for favoring its own apps in the Android mobile phone platform app store. The General Court heard Google’s appeal against that fine last year and a decision is expected in the fall.
Hearings in the AdSense case continue on Wednesday.
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