This is not for AdSense on Google.com, this is for third-party sites with a search feature showing search ads to their own customers.
A third-party site who wants to show ads in their own search results could partner with Google to include AdSense ads in their own results. The Google contract originally required exclusivity, and then was changed to require Google ads to be more prominent.
In the context of the market for third-party sites running search ads, the $1.5 billion fine seems extremely high.
On the one hand, it’s not immediately obvious to take a conglomorate’s total worldwide revenue into account to value a fine for a specific market, versus considering only the revenue for that market.
However in this case Google is squeezing out companies like Yahoo and Bing from increasing their own ad inventory in the few ways that are available to them, aside from increasing their own organic search traffic. So this is where the anti-competitive behavior comes in, and perhaps why the fine is so massive.
I can’t imagine keyword search on third-party sites is responsible for a significant share of overall AdSense revenue, I wonder if it’s even a single digit percentage of their overall ad inventory?
Just trying to get the facts straight. Google provided the ability to search your site. They also allowed you to show ads/make money from these searches. If you wanted to use this, you had to only show Google ads.
I think the press release [1] did a good job of detailing the specific activity that was over the line:
> Starting in 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
Even if the search result and some ads were provided by Google, requiring exclusivity for search adverts was too much.
Because, as I understand it, Google was saying that if you used it search service, you were prohibited from showing non-Google ads anywhere else on the site.
You couldn't just use Google Search and accept ads in those search results a cost of use. This sounds rather like abuse of a dominant position in one area to squash competitors in another.
Because forcing exclusivity is anti-competition. If you want a competitive ecosystem, you create laws that do not allow the largest player in a market to force customers to exclude their competitors in another market in order to use their primary product.
If you're a libertarian, you would think that's fine, but in a libertarian world one company would have 97% of the market, and if you wanted to use their electricity, you would be forced to buy your food from them.
About $8 billion revenue per quarter for EU + Middle East, let's say roughly 60% of people in Europe use the internet and > 90% of them use Google.
Therefore: 8,000,000,000 / (500,000,000 * 0.9 * 0.6) = $29.63 per person revenue per quarter. Could be as much as +- $10 given how arbitrary (research based, but still guesswork) my inputs were...
Somewhere around $100 per person per year seems insane but I guess how much do you spend per year on stuff?
In AdWords the CPC for some keywords is around €3. Obviously not every EU citizen will be the target of these keywords but Google can increase the CPC to recover the money.
"Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers."
In case this is in accusation of corrupt practices aimed to increase the EU budget, note:
- Fines account for <5% of the EU's budget
- The EU budget is relatively small compared to national governments' budgets. EU: 150 billion, Germany + France + UK = 5 Trillion (5,000 billion). That's leaving out 24 smaller economies. National governments have a lot of input in the decision-making process and couldn't care less about a billion here or there. Especially if it risks impacting perceived rule of law.
- In any large bureaucracy, individual decision makers have incentive structure that often diverge fundamentally from those of the organisation as a whole. A prosecutor will have no financial or career advantage tied to the EU's finances. In this specific example, the commissioner responsible (Vestager) is somewhat likely to leave the commission after the May elections anyway, because of another pro-competition decision that was decidedly more important and not appreciated by France and Germany, namely prohibiting the Siemens and Alstom merger.
If you sum up all the fines collected by continent, you will see that (a) EU companies pay fines roughly equivalent to their share of economic activity in the EU, (b) Asian companies pay comparatively more, and (c) US companies are actually fined far less than their share of the economy would suggest. The most likely explanation is that rather high standards of enforcement and corporate governance in the US require less EU intervention.
sounds reasonable to me. this way, you get a disincetive to break antitrust rules for google, while not opening up a fight for shares of the money by their competitors afterwards. EUR 1.5b (~$1.7b) is a nice sum to fight over, after all.
edit: of course, how big the disincentive is is up for debate. :P
"The fines therefore help to finance the EU and reduce the burden for taxpayers."
reduce burden for taxpayers... yeah. how? i don't see my taxes dropping because ppl get fined >.> even if the amount of fines would raise consistently by 1000% still i would pay the same taxes, guarantee you that.
This will be a boon to sites who have lost a lot of their revenue from their "custom search" function on their own website. As described in the article, Google has been squeezing these sites in order to keep more of the advertising revenue for themselves. (You can see it in their results by looking at how the ratio of money made on Google sites versus third party sites has been consistently shifting into the Google side of the pie)
Now I wonder if the EU will take on search engine front ends like startpage.com or duckduckgo who use Google results. Will they be allowed to run their own ad network alongside the Google results? If so that would make them a lot more viable.
Nothing will happen to those other sites because for this particular case Google has already changed its practice after the EU filed an objection in 2016. This fine is retroactive to cover the damages made during the 10 years of investigation. https://www.marketwatch.com/story/the-latest-eu-fine-on-alph...
That doc says Google's deals with publishers relating to AdSense for Search (which e.g. shows ads in newspaper sites' on-site search results) harmed competition by restricting what their partners could do with other potential providers. And that this was abuse of Google's dominant position in the relevant market.
Here are a few key claims about what Google did, from the European commission press release:
> Google's provision of online search advertising intermediation services to the most commercially important publishers took place via agreements that were individually negotiated. The Commission has reviewed hundreds of such agreements in the course of its investigation and found that:
> Starting in 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
> As of March 2009, Google gradually began replacing the exclusivity clauses with so-called “Premium Placement” clauses. These required publishers to reserve the most profitable space on their search results pages for Google's adverts and request a minimum number of Google adverts. As a result, Google's competitorswere prevented from placing their search adverts in the most visible and clicked on parts of the websites' search results pages.
> As of March 2009, Google also included clauses requiring publishers to seek written approval from Google before making changes to the way in which any rival adverts were displayed. This meant that Google could control how attractive, and therefore clicked on, competing search adverts could be.
> Therefore, Google first imposed an exclusive supply obligation, which prevented competitors from placing any search adverts on the commercially most significant websites. Then, Google introduced what it called its “relaxed exclusivity” strategy aimed at reserving for its own search adverts the most valuable positions and at controlling competing adverts' performance.
> Google's practices covered over half the market by turnover throughout most of the period. Google's rivals were not able to compete on the merits, either because there was an outright prohibition for them to appear on publisher websites or because Google reserved for itself by far the most valuable commercial space on those websites, while at the same time controlling how rival search adverts could appear.
Basically Google told publishers not to use any other advertising platform if they want Adsense.
""""In 2006, Google started to include "exclusivity clauses" in contracts which stopped publishers from placing ads from Google rivals such as Microsoft and Yahoo on search pages, the Commission said."""
Based on the cadence and size of these fines for the given offenses, they seem like backdoor taxes, not fines. They're hitting Google's global revenue over comparatively minor offenses, seemingly just enough to keep Google around as a golden goose to extract more wealth out of but not drive them away completely like China.
There was a commentary in the German media in context of Brexit that I think really think sums the EU and her role in the world up nicely:
"Brexit shows what we have in the EU. She clears up issues among neighbors, grating them into rules and sometimes unsatisfactory compromises. But she grates them small, in a civilized and peaceful way. That's her big achievement." (rough translation by me, sorry)
Let's not pretend it's not a mixed bag, e.g.: 'European multinationals are aggressively pursuing one of milk’s few growth markets, where locals say they can’t compete.'
naw. just a giant nationstate trying to control its own resources. theres nothing good about it. at best you could argue its neutral. Personally i see this as nothing more than the occasional revenue dipping. Big companies have to take it because of the market and the eu knows this. anytime theyre short on funds theyll fine facebook or google.
Did anyone play Dune II back in the day? In a world where North America is Atreides, Russia being Harkonnen, the EU is conveniently taking the place of House Ordos (ambitious vying by disparate powers).
[+] [-] zaroth|7 years ago|reply
A third-party site who wants to show ads in their own search results could partner with Google to include AdSense ads in their own results. The Google contract originally required exclusivity, and then was changed to require Google ads to be more prominent.
In the context of the market for third-party sites running search ads, the $1.5 billion fine seems extremely high.
On the one hand, it’s not immediately obvious to take a conglomorate’s total worldwide revenue into account to value a fine for a specific market, versus considering only the revenue for that market.
However in this case Google is squeezing out companies like Yahoo and Bing from increasing their own ad inventory in the few ways that are available to them, aside from increasing their own organic search traffic. So this is where the anti-competitive behavior comes in, and perhaps why the fine is so massive.
I can’t imagine keyword search on third-party sites is responsible for a significant share of overall AdSense revenue, I wonder if it’s even a single digit percentage of their overall ad inventory?
[+] [-] Veelox|7 years ago|reply
I don't understand how that is illegal.
[+] [-] squaresmile|7 years ago|reply
> Starting in 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
Even if the search result and some ads were provided by Google, requiring exclusivity for search adverts was too much.
[1] http://europa.eu/rapid/press-release_IP-19-1770_en.htm
[+] [-] Angostura|7 years ago|reply
You couldn't just use Google Search and accept ads in those search results a cost of use. This sounds rather like abuse of a dominant position in one area to squash competitors in another.
[+] [-] utopcell|7 years ago|reply
[+] [-] Hamuko|7 years ago|reply
Sounds uncompetitive to me.
[+] [-] Sahhaese|7 years ago|reply
[+] [-] pessimizer|7 years ago|reply
If you're a libertarian, you would think that's fine, but in a libertarian world one company would have 97% of the market, and if you wanted to use their electricity, you would be forced to buy your food from them.
[+] [-] __ka|7 years ago|reply
[+] [-] amelius|7 years ago|reply
This makes me wonder, how much does Google make from showing ads to one person?
[+] [-] andy_ppp|7 years ago|reply
Therefore: 8,000,000,000 / (500,000,000 * 0.9 * 0.6) = $29.63 per person revenue per quarter. Could be as much as +- $10 given how arbitrary (research based, but still guesswork) my inputs were...
Somewhere around $100 per person per year seems insane but I guess how much do you spend per year on stuff?
P.S. please feel free to correct my figures!
[+] [-] wslh|7 years ago|reply
[+] [-] isostatic|7 years ago|reply
What price do we sell our personal data for?
[+] [-] matt4077|7 years ago|reply
[+] [-] boggio|7 years ago|reply
Isn't this the same case with Safari on iOS devices?
Update: I posted this before the motivation was published.
[+] [-] kierenj|7 years ago|reply
"Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers."
[+] [-] matt4077|7 years ago|reply
In case this is in accusation of corrupt practices aimed to increase the EU budget, note:
- Fines account for <5% of the EU's budget
- The EU budget is relatively small compared to national governments' budgets. EU: 150 billion, Germany + France + UK = 5 Trillion (5,000 billion). That's leaving out 24 smaller economies. National governments have a lot of input in the decision-making process and couldn't care less about a billion here or there. Especially if it risks impacting perceived rule of law.
- In any large bureaucracy, individual decision makers have incentive structure that often diverge fundamentally from those of the organisation as a whole. A prosecutor will have no financial or career advantage tied to the EU's finances. In this specific example, the commissioner responsible (Vestager) is somewhat likely to leave the commission after the May elections anyway, because of another pro-competition decision that was decidedly more important and not appreciated by France and Germany, namely prohibiting the Siemens and Alstom merger.
If you sum up all the fines collected by continent, you will see that (a) EU companies pay fines roughly equivalent to their share of economic activity in the EU, (b) Asian companies pay comparatively more, and (c) US companies are actually fined far less than their share of the economy would suggest. The most likely explanation is that rather high standards of enforcement and corporate governance in the US require less EU intervention.
[+] [-] black_puppydog|7 years ago|reply
edit: of course, how big the disincentive is is up for debate. :P
[+] [-] mtgx|7 years ago|reply
[+] [-] vectorEQ|7 years ago|reply
reduce burden for taxpayers... yeah. how? i don't see my taxes dropping because ppl get fined >.> even if the amount of fines would raise consistently by 1000% still i would pay the same taxes, guarantee you that.
[+] [-] perttir|7 years ago|reply
Last year they gave Google €4.34bn fine and in year 2017 they gave Google €2.42bn fine.
[+] [-] ChuckMcM|7 years ago|reply
Now I wonder if the EU will take on search engine front ends like startpage.com or duckduckgo who use Google results. Will they be allowed to run their own ad network alongside the Google results? If so that would make them a lot more viable.
[+] [-] zavi|7 years ago|reply
[+] [-] maaaats|7 years ago|reply
Edit: The linked article is now updated, at the time it was basically just a paragraph stating the fine.
[+] [-] rahimnathwani|7 years ago|reply
That doc says Google's deals with publishers relating to AdSense for Search (which e.g. shows ads in newspaper sites' on-site search results) harmed competition by restricting what their partners could do with other potential providers. And that this was abuse of Google's dominant position in the relevant market.
[+] [-] Pyxl101|7 years ago|reply
> Google's provision of online search advertising intermediation services to the most commercially important publishers took place via agreements that were individually negotiated. The Commission has reviewed hundreds of such agreements in the course of its investigation and found that:
> Starting in 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
> As of March 2009, Google gradually began replacing the exclusivity clauses with so-called “Premium Placement” clauses. These required publishers to reserve the most profitable space on their search results pages for Google's adverts and request a minimum number of Google adverts. As a result, Google's competitorswere prevented from placing their search adverts in the most visible and clicked on parts of the websites' search results pages.
> As of March 2009, Google also included clauses requiring publishers to seek written approval from Google before making changes to the way in which any rival adverts were displayed. This meant that Google could control how attractive, and therefore clicked on, competing search adverts could be.
> Therefore, Google first imposed an exclusive supply obligation, which prevented competitors from placing any search adverts on the commercially most significant websites. Then, Google introduced what it called its “relaxed exclusivity” strategy aimed at reserving for its own search adverts the most valuable positions and at controlling competing adverts' performance.
> Google's practices covered over half the market by turnover throughout most of the period. Google's rivals were not able to compete on the merits, either because there was an outright prohibition for them to appear on publisher websites or because Google reserved for itself by far the most valuable commercial space on those websites, while at the same time controlling how rival search adverts could appear.
From: http://europa.eu/rapid/press-release_IP-19-1770_en.htm
[+] [-] thefounder|7 years ago|reply
""""In 2006, Google started to include "exclusivity clauses" in contracts which stopped publishers from placing ads from Google rivals such as Microsoft and Yahoo on search pages, the Commission said."""
[+] [-] zubi|7 years ago|reply
[+] [-] perttir|7 years ago|reply
[+] [-] jquery|7 years ago|reply
[+] [-] mtgx|7 years ago|reply
[+] [-] icebraining|7 years ago|reply
[+] [-] JustSomeNobody|7 years ago|reply
[+] [-] peteretep|7 years ago|reply
[+] [-] okket|7 years ago|reply
"Brexit shows what we have in the EU. She clears up issues among neighbors, grating them into rules and sometimes unsatisfactory compromises. But she grates them small, in a civilized and peaceful way. That's her big achievement." (rough translation by me, sorry)
https://twitter.com/tagesschau/status/1105932622000209921 (in German)
[+] [-] growlist|7 years ago|reply
https://www.politico.eu/article/eus-milk-scramble-for-africa...
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] PHGamer|7 years ago|reply
[+] [-] bromuro|7 years ago|reply
[deleted]
[+] [-] tnr23|7 years ago|reply
[+] [-] easytiger|7 years ago|reply
[+] [-] tareqak|7 years ago|reply
[0] https://www.cnbc.com/2019/03/20/google-eu-fine-investors-not...
[+] [-] PrimeDirective|7 years ago|reply
[+] [-] zavi|7 years ago|reply
[+] [-] kabsekabtak|7 years ago|reply
They control way too much.
[+] [-] bb101|7 years ago|reply
[+] [-] gerash|7 years ago|reply
[+] [-] aurebox|7 years ago|reply
[+] [-] sabujp|7 years ago|reply
[+] [-] bitxbit|7 years ago|reply