You win some, you lose some: Google AdSense decision annulled

The General Court (GC) has annulled the EUR 1.49 billion fine imposed on Google for anticompetitive contracts related to online advertising. According to the GC, the European Commission had not properly assessed the lock-in effect of contractual restrictions imposed by Google’s AdSense for Search (“AdSense”) service on online publishers. The GC upheld the definition of the relevant advertising markets and the finding that Google had a dominant position in those markets. 

Under the Digital Markets Act, gatekeepers like Google will be prohibited from, among other things, restricting businesses from offering their products or services on other platforms and restricting the promotion of products or services outside the gatekeeper’s ecosystem. Notably, the Commission will not have to prove the effects of similar clauses  by designated gatekeepers, including Google. 

Background

In March 2019, the Commission adopted a decision imposing a fine of EUR 1.49 billion on Google for abusing its dominant position in the online advertising market by imposing contractual restrictions in its AdSense contracts that allegedly locked in Google’s customers. 

Google’s AdSense service placed advertisements alongside search results on third-company websites containing an integrated search engine. The Commission took issue with the following contractual clauses:

1. requiring that publishers use AdSense only (the Exclusivity Clause);
2. giving AdSense preferential placement (the Placement Clause); and
3. requiring that publishers seek Google’s approval before making changes to the display of advertisements, including competing advertisements (the Prior Authorisation Clause). 

According to the Commission, these clauses could foreclose competing services with AdSense, thus creating a lock-in effect. In September 2016 (two months after having received the Statement of Objections), Google removed or amended those clauses.

GC's judgment

On 18 September 2024, the GC upheld the Commission’s definition of the relevant advertising markets and the finding that Google held a dominant position within those markets. However, the finding of an abuse was not upheld. 

According to the GC, the Commission had failed to consider all the relevant factors when determining the duration of the contract clauses that it considered abusive. Specifically, it found that the European Commission had erred in calculating the length of the contracts between third parties and Google, noting that many of the agreements lasted only a few years and were subject to renewal and early termination.

The GC found that the Commission should have verified whether publishers had the opportunity to source from Google’s competitors, either while negotiating renewals or extensions of their agreements with AdSense or early termination of their contract. Instead, the Commission confined itself to taking into account the cumulative duration of the contracts. 

The GC furthermore ruled that the Commission had failed to find that those clauses could have produced a foreclosure effect. 

Conclusion

Google must have welcomed the judgment after the European Court of Justice had upheld the Google Shopping decision just a week before the GC’s judgment. 

The AdSense ruling furthermore confirms the position taken in recent GC judgments setting a high threshold for proving anticompetitive conduct (see our July 2022 newsletter on the Qualcomm judgment and our February 2022 newsletter on the Intel judgment).

At the same time, it is notable that under the Digital Markets Act the Commission will no longer be required to demonstrate the effects of similar clauses by designated gatekeepers.

To avoid any enforcement action in a changing landscape, companies should continue to carefully draft clauses