Google focuses on fairness, evidence in final jab at massive antitrust fine

LUXEMBOURG (CN) — The EU’s second-highest court ended a three-day hearing Wednesday focused on the validity of a fine that, when given in 2019, was the largest penalty for anti-competitive behavior ever levied by Brussels. 

While the fine against Alphabet, Google's parent company, is for 1.49 billion euros ($1.6 billion), it belongs to more than $9 billion in fines for anti-competitive behavior that Google is challenging in EU courts. The European Commission demanded the sum after determining that Google had abused its near-monopoly in the internet-search market by forcing websites to sign restrictive advertising contracts if they agreed to work with Google AdSense.

Launched in 2003, AdSense acts as an intermediary between websites and ad buyers. The antitrust allegations focus on the sale of search ads, which appear above results when a user enters a querier into Google. In paying for such access, however, companies must agree to Google terms that restrict the placement rival advertising or limit where rival ads can be placed. 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.

Hearings before the Luxembourg-based court opened on Monday, with arguments over whether Google had dominance in the online advertising space. On Tuesday, the parties wrangled over the specific terms of the advertising contracts. 

The Silicon Valley giant questioned Wednesday what evidence the commission offered to demonstrate that the company had rejected ads on commercial grounds. “There are no examples, none,” said Google lawyer Jack Williams. He argued that Google's policing of websites that show its ads stems from its duty to prevent deceptive advertising practices. 

According to commission lawyer Nicholas Khan, however, Google did not prove its concerns about ad quality were the real reason for these contracts. “It has failed to submit evidence to support those justifications,” Khan told the five-judge panel. 

As Google sees the entire infringement claim as unfounded, its legal team asked the court to annul the fine completely. But even if the judges find Google’s contracts did run counter to EU law, the company takes issue with the amount. “The very large fine proposed in this decision is neither appropriate nor proportionate,” Google lawyer Claire Jeffs said. Jeffs contends that the commission made “errors in the calculation methodology” when coming up with the 1.49 billion euro figure, including overstating Google’s revenue by 150%. 

The commission pushed back, with lawyer Anthony Dawes telling the court that the fine amounted to less than 1.3% of Google’s turnover in 2018, the year preceding when the penalty was given. EU regulations allow the commission to fine companies 10% of total sales for competition infringements. There was “nothing unfair or arbitrary in the commission’s approach,” Dawes said. 

Separate from this matter, Google is appealing a 2021 decision by the General Court that upheld a 2.4 billion euro ($2.5 billion) fine for abusing its internet search dominance to undercut competitors of its Comparison Shopping Service. Hearings for another appeal, this time against a 4.3 billion euros ($4.5 billion) fine for favoring its own apps in the Android mobile phone platform app store, were held last year and that decision is expected in the fall. 

A decision in the AdSense case likely won't be reached until next year.

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