• EU court overturned the €1.49bn Google fine, citing regulator’s failure to consider all relevant factors.
• Google’s EU court win may reshape digital ad competition.

“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure,” declared EU Competition Commissioner Margrethe Vestager in 2019, when she slapped the tech giant with a €1.49 billion fine for alleged antitrust violations.

Five years later and the tables have dramatically turned. On September 18, 2024, the General Court of the European Union overturned this massive penalty, ruling that the EU’s competition enforcer had failed to consider the duration of the contracts in question adequately. 

This reversal vindicates Google in the EU and sends shockwaves through the digital advertising landscape, stirring discussions on the future of online marketing. The 2019 case focused on Google’s AdSense business, which displays contextual ads on third-party websites. 

The European Commission accused Google of abusing its strong market position by incorporating exclusivity restrictions into contracts with advertising websites, essentially prohibiting them from running adverts from Google’s competitors.

Let’s briefly look back into what led Google to that juncture in the EU five years ago. The story began in March 2007, when Google acquired DoubleClick, a software company that helped websites sell ads, for US$1.3 billion. That was acquisition is seen as the start of Google’s dominance in online advertising, a positon identified by the US Department of Justice and 17 states.

The government believed that by controlling DoubleClick, Google could monopolise critical components of the digital advertising supply chain, which generates over US$12 billion in annual revenue for websites and apps in the US alone.

The Department of Justice was of the opinion that Google’s dominance left limited choices for publishers and advertisers, thus reducing competition and innovation in the ad tech industry.

Today, according to publicly-available court filings, Google controls about 91% of the publisher advertising server market, 70% of ad exchanges (where advertisers and publishers negotiate prices), and 85% of advertiser tools. At this level of control, the US government argues that Google could extract inflated costs, which would then be passed on to consumers.

Of course, Google disputes these accusations. But between 2017 and 2019 alone, the tech giant was hit with fines worth €8.2 billion, all due to antitrust violations. Those fines began to intensify scrutiny for big tech in Europe.

In fact, Google failed in its attempt to have one of those fines overturned two weeks ago, but on September 18, Europe’s second-top court ruled that the European Commission –which levied the €1.49 billion fine – had acted in error, and had made mistakes in its assessment.

The court stated that the EU regulators failed to demonstrate that Google’s practices had deterred innovation, harmed consumers, or helped the company maintain and strengthen its dominant position in national online search advertising markets.

Which way for the digital ad industry?

On the surface, the decision challenges the EU’s approach to regulating big tech. However, if you look deeper, it may lead to a reassessment of antitrust enforcement strategies.

“We are pleased that the court has recognised errors in the original decision and annulled the fine,” the company said in a statement to Reuters. The company noted that the reason the ruling had gone its way was due to the fact that it had changed its contracts in 2016 to remove antitrust stipulations, well before the Commission began its deliberations.

The European Commission, for its part, said it would “reflect on possible next steps.” The Commission can appeal the decision to the EU’s highest court, the Court of Justice.

For advertisers and publishers, the court’s decision could mean a continuation of the status quo, at least in the short term. However, it may also spur increased competition in digital advertising as other companies feel emboldened to challenge Google.

In a Stanford Technology Law Review paper on Google’s dominance, Dina Srinivasan, a former ad executive, now an antitrust campaigner, says advertisers would end up paying lower fees if Google were to be forceably broken up, and the savings could be passed on.

Speaking in Wired, Google researcher Adam Heimlich, said competition could lower supply chain fees and increase innovation. That would drive “better monetisation of websites and better quality of websites.”

In the same article, Tim Vanderhook, CEO of Viant Technology, hoped that consumers would encounter a greater variety of ads, fewer ads based on user preferences (which he termed ‘creepy’), and pages less cluttered with ads.

The ruling’s outcome may force EU regulators to reassess their approach to antitrust enforcement in the tech sector.

While Google may have won this battle, the war over the future of digital advertising and the role of big tech in our society is far from over. As long as Google’s legal bill (including the fines it’s forced to pay) is less than the profits it derives from disputed practices, we can expect to see the skirmishes continue.