According to the article, Google recently won a court challenge against a 1.49 billion euro ($1.66 billion) European Union (EU) antitrust fine imposed five years ago that targeted its online advertising business.

The EU’s General Court said it was throwing out the 2019 penalty imposed by the European Commission, which is the 27-nation bloc’s top antitrust enforcer.

“The General Court annuls the Commission’s decision in its entirety,” the court said in a press release.

The commission’s ruling applied to a narrow portion of Google’s ad business: Ads that the U.S. tech giant sold next to Google search results on third-party websites.

Google Exclusivity Clauses

Regulators had accused Google of inserting exclusivity clauses in its contracts that barred these websites from running similarly placed ads sold by Google’s rivals. The commission said when it issued the penalty that Google’s behavior resulted in advertisers and website owners having less choice and likely facing higher prices that would be passed on to consumers.

The EU General Court’s Reasoning

But the General Court said the commission “committed errors” when it assessed those clauses. The commission failed to demonstrate that Google’s contracts deterred innovation, harmed consumers or helped the company hold on to and strengthen its dominant position in national online search advertising markets, it said.

The ruling can be appealed, but only on points of law, to the Court of Justice, the bloc’s top court.

The commission said in a brief statement that it “will carefully study the judgment and reflect on possible next steps.”

Google said it changed its contracts in 2016 to remove the provisions in question, even before the commission imposed its decision.

“We are pleased that the court has recognized errors in the original decision and annulled the fine,” Google said in a statement. "We will review the full decision closely.”

Google Faces other Antitrust Concerns

The company’s legal victory comes a week after it lost a final challenge against a separate EU antitrust case for its shopping comparison service that also involved a hefty fine.

They were among three antitrust penalties totaling about 8 billion euros that the commission punished Google with in the previous decade. The penalties marked the beginning of an era of intensifying scrutiny for Big Tech companies.

Since then, Google has faced escalating pressure on both sides of the Atlantic over its digital ad business. It is currently battling the Justice Department in a U.S. federal court over allegations that its dominance over the technology that controls the sale of billions of internet display ads constitutes an illegal monopoly.

British competition regulators this month accused the company of abusing its dominance in the country’s digital ad market and giving preference to its own services.

EU antitrust enforcers carrying out their own investigation suggested last year that breaking up the company was the only way to satisfy competition concerns about its digital ad business.

Discussion Questions

1. What was the rationale for the European Commission, which is the EU’s top antitrust enforcer, imposing a 1.49 billion euro fine against Google?

As indicated in the article, the European Commission’s concern was the Google exclusivity clause, which barred websites from running similar ads sold by Google’s rivals. The commission said when it issued the penalty that Google’s behavior resulted in advertisers and website owners having less choice and likely facing higher prices that would be passed on to consumers. In the European Commission’s view, the 1.49-billion-euro fine was an appropriate response to Google’s “strong-arm” tactics that effectively resulted in control of the online advertising market and thereby violated EU antitrust law.

2. As the article indicates, the EU’s General Court annulled the European Commission’s decision in its entirety. Do you support or oppose the ruling of the EU’s General Court? Explain your response.

This is an opinion question, and student responses may vary. In your author’s opinion, the ruling of the EU General Court “paves the way” for Google to engage in similar tactics in the European market in the future. A substantial monetary fine is designed to deter certain behavior, and now that the monetary fine has been eliminated, there is no deterrent. In your author’s estimation, the EU General Court’s decision represents tacit approval for Google to engage in similar tactics in the future.

3. As the article indicates, EU antitrust enforcers carrying out their own investigation suggested last year that breaking up the company was the only way to satisfy competition concerns about its digital ad business. In your reasoned opinion, is breaking up a company a viable antitrust remedy? Why or why not?

This is an opinion question, so student responses may vary. In your author’s opinion, such an antitrust remedy should only be used as a last resort, if at all. Breaking up a company into smaller parts creates inherent inefficiencies that could lead to business failure, and there are other less drastic remedies available (for example, substantial monetary fines like the 1.49 billion euro fine initially imposed by the European Commission).