• The European Commission has fined Google €2.95 billion ($3.45 billion) for breaching EU anti-trust rules by distorting competition in the advertising technology industry (adtech) on September 5.

• Google is blamed for favouring its own online display advertising technology services to the detriment of competing providers of advertising technology services, advertisers and online publishers. 

The Commission has ordered Google to:

i) Bring these self-preferencing practices to an end.

ii) Implement measures to cease its inherent conflicts of interest along the adtech supply chain. 

• Google has 60 days to inform the Commission about how it intends to do so.

• The fine, the fourth penalty Google has faced in its decade-long fight with EU competition regulators, follows bubbling trade tensions between major global powers.

• Google said the decision was wrong and that it would appeal.

• US President Donald Trump, who has hit Europe with trade tariffs, called the move “unfair”. He has threatened to retaliate against the EU for any pushback against Big Tech. 

What is the case about?

• Google is a US multinational technology company with advertising as the  main source of revenue.

• In particular, Google sells advertising on its own websites and applications, and  intermediates between advertisers that want to place their ads online and publishers (i.e. third-party, websites and apps) that can supply that space.

• Advertisers and publishers rely on the adtech industry’s digital tools for the placement of real time ads not linked to a search query, such as banner ads in websites of newspapers (display ads). 

In particular, the adtech industry provides three digital tools: 

i) Publisher ad servers used by publishers to manage the advertising space on their websites and apps.

ii) Programmatic ad buying tools for the open web used by advertisers to manage their automated advertising campaigns.

iii) Ad exchanges where demand and supply meet in real time, typically via auctions, to buy and sell display ads.

• Google provides several adtech services that are intermediate between advertisers and publishers to display ads on websites or mobile apps. 

It operates:

i) Ad buying tools — Google Ads and DV 360

ii) A publisher ad server — DoubleClick For Publishers (DFP)

iii) An ad exchange (AdX).

• The Commission’s investigation found that Google is dominant in: 

i) The market for publisher ad servers with its service DFP.

ii) The market for programmatic ad buying tools for the open web with its services ‘Google Ads’ and ‘DV360’. 

Both markets are European Economic Area-wide.

In particular, the Commission found that, between at least 2014 and today, Google abused such dominant positions in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU) by:

i) Favouring its own ad exchange AdX in the ad selection process run by its dominant publisher ad server DFP by, for example, informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction.

ii) Favouring its ad exchange AdX in the way its ad buying tools Google Ads and DV360 place bids on ad exchanges. For example, Google Ads was avoiding competing ad exchanges and mainly placing bids on AdX, thus making it the most attractive ad exchange.