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Google hit with €1.5B fine from EU over advertising (bbc.com)
540 points by okket 36 days ago | hide | past | web | favorite | 400 comments



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?


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?

Single digit percent of Google's overall ad inventory would be $1bn-$10bn per annum, at current scale. Google's ad business is big. Over 10 years...

One of the first "tricks" you learn on adowrds is to turn off (it's hard to find) "search partners," or at least split it off and quarter your bids. It's on by default and'll take up a surprising amount of your budget, using default settings.

I wouldn't be surprised if it ads up to a meaningful share of the "search ads" market.


Vestager said the fine had been calculated based on Google's online advertising revenue in Europe.

https://www.politico.eu/article/europe-google-margrethe-vest...


Seems like there are ways to avoid tax and ways to "recover" it back.


I happen to believe that the excessive "fines" that the EU has been directing at the technology industry are a brazen plan to extract money from large technology companies without violating international taxation treaties signed with the United States.


If that's the case, they need to start issuing more fines to more companies to really make a dent.

These fines are big, but as a percentage of the tech industry revenue, they're still under 0.1 percent


That's not the relevant comparison. What are the fines compared to net profit in the EU?


Fine is directly calculated on profit in EU - a'la tax.


As long as the punishment for the crime is less than the crime itself, crime will perpetuate.

If you steal 1.000,00€ from a bank, they don't fine you 1€. No. They send you to jail for years.


Not sure why you're being down-voted... without a punitive component to the fine, (i.e. if it were only damages) then Google would have absolutely zero incentive to even pretend to change their ways. They could just pay a small fine, laugh, and say "See you next year."

EDIT: And now I'm getting down-voted too. Would you nay-sayers care to chime in with more than an e-frown?


The top-level commentator isn't arguing that fines should be capped at the damages, he's arguing that they should be indexed to the damages (say, proportional to them). If I steal $50, the punishment is larger than $50, but it's determined relative to that magnitude, and in particular does is not just picked to be a fraction of my income. A $100,000 fine would be excessive punishment for stealing $50 dollars, and the top-level commentator is wondering whether a €1.5B fine is excessive in light of the fact that the entire market third-party search is much smaller than that.


It is indexed, just not to the damages, but to the revenue of the guilty party.

Other countries in the EU do this as well, even in personal matters. For instance, a speeding ticket is based off a percentage of your annual income. Why? Because if you make $200k a year, a $50 fine isn't a big deal, at all, but if you barely scrape by, $50 could break your budget for the month.


First, the vast majority of the world does not use the day-fine system. But more importantly, it makes no sense to index corporate fines to a firm's revenue because corporations can be split/combined (unlike people). Indexing fines to firm size would lead to market distortions, especially in the case when those fines are a significant fraction of total revenue.


At this point it might actually make sense for Google to create a separate European entity so they won't get fined so heavily all the time in the EU. I guess they'd have to see how much of a benefit that would be relative to the amount of taxes they would save by being in Ireland (I'm not sure if that's still a thing).


The fine is already based on Google's European (not global) ad revenue as someone else quoted in the comments.


Google has already started the process of splitting to a Google EEA.

They sent notices recently about a transfer of data custodianship to GSuite customers.


Google isn't a single person. They're already more likely violate some laws and regulations just because they're so big. You can't double dip by treating every small infraction like it's a huge company-wide problem.


Too Big To Be Accountable ??????


Since when does accountable mean being fined over $1 billion? It is beyond absurd. If Waymo gets a speeding ticket in Europe, should it also be for $1 billion? At least the speed limit is a clearly defined rule. Selectively enforcing an arbitrary definition of "anticompetitive" is not.


> Why? Because if you make $200k a year, a $50 fine isn't a big deal, at all, but if you barely scrape by, $50 could break your budget for the month.

That makes no sense. If you're stealing $50 then a $150 fine is a deterrent even if you're a billionaire, because the expected value if you're caught is -$100, which has nothing at all to do with how much money you have.

And if that caused the billionaire to not care, that's great. If I got $150 every time someone stole $50 from me and that didn't deter them, I'd start researching how to get them to steal more money from me because it's so profitable to me. If they're willing to pay that much more than something costs, at that point you're just selling it to them and deterrence is not desired because the transaction is apparently net positive to both parties.

Moreover, it seems that you're suggesting that someone with $0 income and $0 assets then should have a <=$50 fine because it's all they can afford? That's the thing that really wouldn't serve as a deterrent, in a problematic, net negative consequences sort of way.


You are missing the point.

Google does not just steal money which we get back with a fine and thats it.

It drives competitors out of the market and that causes damage to the economy and is against the interests of the population where they do business.

They should make the Managers personally liable.

If you think about it 1.5 Billions is laughable for a company like Google, its only money which they have plenty from. Nothing will change.


>If you think about it 1.5 Billions is laughable for a company like Google, its only money which they have plenty from. Nothing will change.

Just because they have a lot of money doesn't mean they are okay with losing a bunch. As long as the fine amount, adjusting for the probability of the fine, is higher than benefit Google attains by breaking the law it will act as a deterrence.


> Google does not just steal money which we get back with a fine and thats it.

> It drives competitors out of the market and that causes damage to the economy and is against the interests of the population where they do business.

That's the same thing. The harm can be measured in money and a proportional fine imposed. That is no argument for the fine to be proportional to total revenue rather than having any relationship to the harm itself.

> They should make the Managers personally liable.

At which point the "manager" is compensated by the company or its liability insurance for whatever retribution the government takes on them as an individual, and it's still the company paying regardless.

> If you think about it 1.5 Billions is laughable for a company like Google, its only money which they have plenty from. Nothing will change.

I don't know about that. In the US the tech companies used to mostly ignore Washington, until it stopped ignoring them. Now they're some of the biggest spenders on lobbying.

That would take a different form in Europe because the laws are different, but if you're not expecting this to lead to some variant of "money buys influence" you're likely in for a surprise. So it will likely change that at least.

Which is another reason proportionality is important. If preventing a $1M fine is worth spending $1M on lobbying then preventing a series of multi-billion dollar fines is worth...


> If you're stealing $50 then a $150 fine is a deterrent even if you're a billionaire, because the expected value if you're caught is -$100, which has nothing at all to do with how much money you have.

This is not true if you see $50 and $150 dollars as basically the same amount when compared to your overall wealth. Would you care about a 2 cent fine for overrunning you time on a 1 cent parking space?


> This is not true if you see $50 and $150 dollars as basically the same amount when compared to your overall wealth. Would you care about a 2 cent fine for overrunning you time on a 1 cent parking space?

At which point you can be happy that the rich person is voluntarily paying the 3 cent fine instead of the 1 cent parking fee.

If you made it a $1000 fine vs. a 1 cent parking fee then they would pay the parking fee, but how is that actually better? You convinced them to spend more of their time keeping track of how long they had before having to put money in the meter and as a result you ended up with less money. Net loss to everyone.

Meanwhile now you're creating a bunch of perverse incentives for rich people to register their cars in someone else's name or waste thousands of man hours on both sides to contest an ordinary parking fine, and creating a bunch of perverse incentives for governments to pass vague, misleading, counterintuitive or impossible to comply with laws so they can jump out of the bushes and impose massive fines on anyone who walks by with money in their pocket.


A normal fine simply becomes "the cost of doing business". The point is to deter Google, not to simply add a cost to its activities.

Related links:

https://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/fine...

NYT: https://www.nytimes.com/2005/05/15/books/chapters/freakonomi...

NPR: https://www.npr.org/2008/03/31/89233955/dan-ariely-takes-on-...


A fine is a price -- exactly. So why are you trying to deter them from doing something which they're willing to pay you more to let them do than it costs you to let them do it?

Or if the fine would be lower for some other company with less money, then why are you willing to let that other company pay less to do it than it costs you to let them do it?


The daycare owner didn't want $10, he wanted to go home at 4pm.

You're missing the forest for the trees.


> The daycare owner didn't want $10, he wanted to go home at 4pm.

Then he should have set the late fee to as much as the amount he wanted to go home earlier. Which would still be the same amount for every parent regardless of how much money they had, because which parent is late has nothing to do with how much he values not being able to go home on time.


So you set it to $1000. Now the parents are still late and also argue about the insane fine, so you get no money and end up staying later than you would have anyway arguing with the parents.

How about instead of a fine you give the kids to CPS. You go home on time, the late parents never come back, or if they do they're never late again, and you win.

I guess the point is that monetary punishments don't seem to work when companies can consider it as 'cost of doing business.' If we start taking away the company's hypothetical metaphorical children when they're late to pick them up then they have a reason to listen.


> So you set it to $1000. Now the parents are still late and also argue about the insane fine, so you get no money and end up staying later than you would have anyway arguing with the parents.

Except that you do ultimately get the $1000, because you have a valid contract specifying that, and the premise is that some people are willing to pay it. Which is great -- you get paid $1000/hour to stay an extra hour. Well worth it. (And if not, specify the amount that makes it worth it.)

> How about instead of a fine you give the kids to CPS. You go home on time, the late parents never come back, or if they do they're never late again, and you win.

At which point you still receive no money but have to spend time arguing with them anyway when they show up at your house with an army of lawyers (or a machete) because you left their kids with CPS. And then you lose all your business because no one will trust their kids to someone who would leave them with CPS.

> I guess the point is that monetary punishments don't seem to work when companies can consider it as 'cost of doing business.' If we start taking away the company's hypothetical metaphorical children when they're late to pick them up then they have a reason to listen.

But we don't need them to listen as long as they're paying. Just take their money. It's worth more than their compliance, by definition, because the amount is explicitly chosen that way.


Fine is not supposed to be a price, taxes serve that purpose.


A fine is supposed to be a price. If the only purpose was deterrence then why isn't every offense a capital one and every fine in the amount of "everything you've got"?

Taxes are something else entirely. Income taxes aren't intended to put a price on working so that people won't do it unless it's worth the cost, they're intended to raise government revenue.


A fine is supposed to be a deterrent so it needs to be high enough to deter.


It's supposed to be a price.

Suppose there are fines for both texting while driving and blocking traffic. Now someone is driving in a place where they can't stop without blocking traffic, when they think of a piece of information that they need someone else to know as an urgent matter of life and death.

If they don't send the information right away their kid is going to die. No fine is going to deter them from that. To account for the probability of getting caught, the deterrence-level penalty would have to be something like death for you and your whole family.

I assume nobody is going suggest that the penalty for blocking traffic should be that the government will snuff out your bloodline. Because that's disproportionate, because the fine is supposed to be a price -- and in that case it's one worth paying, because the alternative is worse, so that's what we should want to happen. It's not a problem that we failed to deter someone from blocking traffic for a minute in order to save their child. "Fixing" things so that we actually deter them from that (and then their child dies) is not an improvement.

And the same is true for less drastic events that are still worth more than the cost of blocking traffic for a minute. Which is why a fine is a price, proportional to the harm.


>At which point you can be happy that the rich person is voluntarily paying the 3 cent fine instead of the 1 cent parking fee.

No, because the issue here is not like a fee, it's about breaking the law and how you should be punished for it in order for it to deter you. A more apt comparison would be "you can be happy that the a rich person is voluntarily paying 500$ to park on top of a crosswalk. In this case you want to deter the person from doing something that harms others, not just to make them pay for it, which in this case means either a fine indexed to income or jail time, so it hurts you even if you are a billionaire.


Nope, deterrence is still only required proportionally. If someone parks on a crosswalk and the cost of that to society is $200 and the fine is $500 then the fact that they're paying $500 means you're still coming out ahead. And if the cost to society is more than $500 then you've set the fine wrong regardless of who is paying it.


But the point isn't to turn something bad into a valid transaction that is simply unfavourable. The point is to deter the behaviour in the first place, regardless of how much you're willing to pay to do it.


But why would you want to do that? Why would you prefer no-transaction over one that generates a $300 profit?


Nope, deterrence is still only required proportionally

Cite?


There is an argument for indexing fines to income or net worth for people too (in addition to severity of the crime) -- if you want to stop a behavior, for example speeding, it doesn't make sense to set the fine equal for everybody unless wealth distribution in society is remarkably flat, so the marginal value of lost money is similar for everybody. If you don't index for ability to pay you just create a separate set of laws for different classes of people.

This is basically the same argument as for progressive taxation.


> There is an argument for indexing fines to income or net worth for people too (in addition to severity of the crime) -- if you want to stop a behavior, for example speeding, it doesn't make sense to set the fine equal for everybody unless wealth distribution in society is remarkably flat, so the marginal value of lost money is similar for everybody. If you don't index for ability to pay you just create a separate set of laws for different classes of people.

The issue is that stopping the behavior is committing to a bad abstraction.

Cars can kill people even below the speed limit. If you drive faster, the probability goes up. That is an externality, because you put others in danger in addition to yourself, regardless of which speed it is. In principle what you ought to do is price the externality. You create some amount of risk by driving a mile at 50MPH, so you're charged a proportional amount for that. The risk created by driving at 70MPH is more, so the charge should be higher, proportional to the higher risk.

But that would require monitoring the speed that every car drives every mile and billing for it. Until recently that wasn't even plausible and even now it would be a huge privacy invasion. So instead we settle on choosing some speed, ignoring the cost of anyone driving slower than that even if its true cost is non-zero, and whacking anyone who drives faster with a disproportionate fine to compensate for most instances going undetected.

Committing to deterring all speeding at any cost is completely ignoring why we're doing this to begin with. We don't need to eliminate all risk -- that would imply eliminating all cars and other vehicles and in practice isn't possible even then.

What we need is to throttle the risk so that it remains at a manageable level. Which is exactly what pricing it does. That's true whether you're doing meticulous risk accounting or using blunt stochastic methods like speeding fines.

And when you price something, rich people buy more of it because they have more money. If the price you've assigned to the risk is actually proportional to the cost being imposed by taking it, you really don't need to stop them. Just let them pay for the risk in money. Then use the money to pay for safety improvements or compensate victims or whatever you like -- if the amount they're paying is properly proportional to the risk then you come out better off this way than by actually deterring them.

> This is basically the same argument as for progressive taxation.

The argument for progressive taxation is that we're not trying to discourage behavior and the rich are better able to pay, so charging them more will have less detrimental effect because it will have a lower impact on their consumption. It's more about taxing the poor less than taxing the rich more.


"when you price something, rich people buy more of it because they have more money. If the price you've assigned to the risk is actually proportional to the cost being imposed by taking it, you really don't need to stop them. Just let them pay for the risk in money. Then use the money to pay for safety improvements or compensate victims or whatever you like..."

So don't try to stop rich people from driving drunk and killing people, for instance? Just let them do it and then pay off the victims and the victims' families?

Is that really what you're suggesting?

Somehow I suspect you'd reconsider if someone you cared about was killed in a DUI accident. No amount of money can bring them back.


You're just committing to the bad abstraction again. Driving drunk is worse than speeding by exactly the amount that it increases the probability that you hurt someone. Which in that case is a lot, and so the fine should be proportionally a lot higher.

"You can't bring them back" isn't any less true for someone who kills someone driving 65MPH in a 55MPH zone -- or 55MPH in a 55MPH zone. The only difference is the probability, which is a difference in quantity rather than kind.

> No amount of money can bring them back.

Neither can it bring back the person hit by a bus because the government didn't have that money to spend fixing a bad intersection. Should we really let two families lose loved ones to that intersection when they could be saved with the money that not deterring a risk taker generates, even if that risk ultimately kills one person? What about the family who lost someone but the compensation allowed the survivors to live somewhere safer or afford better medical treatment and that saved someone else?

What you really want to be arguing is that we should never be trading money for lives. Everyone viscerally feels kind of that way. But that doesn't work. There is always a marginal safety improvement that would save additional lives in exchange for additional money. Any time you choose a smaller number of lives over a larger amount of money, what you're really doing is choosing a smaller number of lives over a larger number of lives.


What happens to your scenario if the fine is for murder, not theft? What happens if the excess speeding results in measurable excess deaths? Let's keep it real.


Exactly. Why should corporations get off easy when we don't?


Corporate law has lots of grey area, robbing a bank doesn't.


Because we can't close corporations for a rules violation.


I mean we could


Kind of like how we could implement the death penalty for marijuana possession?


It's not like there aren't countries where that exist.


Right, but should we? Probably not. That’s what I’m getting at.


If we really cared about stopping marijuana possession, a death penalty that was objectively and consistently applied would probably work very well.


Arguments by analogy are not worth anybody's time.


Arguments by analogy are an excellent way to compose an argument. Socrates built entire ethical systems using analogy.


You only have to look at what we have above, a changing of the subject from corporate punishment to...execution for marijuana possession. That is bad community'ing.

As an aside, I've got some bad news about how Socrates' method worked out for him.


>> Because we can't close corporations for a rules violation.

> I mean we could

The post I was replying to talked about “closing” a corporation for a rule violation. Closing a company is akin to “killing” it, not “punishing” it. I think the analogy stands.


It worked out really well for him. You've heard of him thousands of years later. Thousands of years from now persons will continue to discuss him and you and all of us'll likely be forgotten.


We can, we just chose not to.


We chose not to because it’s a bad idea. That’s what I’m getting at here. “Killing” a company for a rules violation is also probably a bad idea.


Killing a company for repeated rules violations is perfectly okay with me though.


Why shouldn't we all get off easy (or easier)?


Imagine if the punishment for stealing was to be fined for 10% of the amount you stole. Like, you get to keep 90% of it.

You'd rob a bank and then drop by the police station to drop off their cut just to avoid the hassle of "getting investigated" later.

So obviously the punishment has to be worse than the value of doing it. But not 1:1 either, if you know you'll only catch 50% of robbers, then the fine would have to be something like ${amountStolen}*3 so that the equation makes the Expected return of robbery sharply negative. I.e. if you expect to get caught 50% of the time, and only had to return the money you stole when caught... then robbery would be very profitable. If you had to pay twice what you stole, then the Expected return is actually a wash, and wouldn't necessarily deter potential robbers. However if you have to pay a fine of 3x what you stole and you think you'll get caught 50% of the time then it's a money-losing venture.

This is all ignoring jail time, of course, because no one can send Google to jail... so from the corporations point of view it just comes down to money.


At $1.5B, it's about collecting revenue to fund EU activities. It's far beyond the amount of revenue the infraction generated by order(s?) of magnitude, and was a gray area to boot.

Keeping the taxes as "fines" ensures they can give EU companies favorable treatment. It's the definition of corrupt: "a willingness to act dishonestly in return for money"


>It's far beyond the amount of revenue the infraction generated by order(s?) of magnitude

$1.5B is far below the amount of revenue Google got from advertising since 2006. I'm not sure what you mean by this.


In European law, jail times and fines are multiplied by consecutive infringements to be punished. Meaning if you stole three times in a row and get caught after the third, you get sentenced three times the theft sentence.


Because then, like corporations do, we won't correct our behavior, we'll just accept the punishment as an occasional cost.


I believe part of the purpose of corporations is to create an entity that is capable of doing "icky" things that might be unpalatable for a person to do, but need to be done nonetheless. Specific examples of "icky" things include building war weapons, producing/testing drugs that we know will kill some patients, performing tasks which create pollution which will kill people, etc. I want to be clear that I'm not proposing how anything should be, and am definitely not implying we should let corporations run amok. I'm just suggesting I believe we're lenient on the icky behaviors of corporations by design. It saves legislators from having to specifically carve out exceptions in the law to allow dangerous things things. Nobody wants their name next to something that sounds like, "XYZ is allowed to kill some people". Instead, they just try to corral them in when it gets to be "too much."


If that's the case, that sounds like a good argument to not allow incorporation.


Do you have another suggestion for how to get icky things done which must be done?


Your argument is predicated on the fact that ‘they must be done’. I disagree.


Almost every meaningful human endeavor will result in some human deaths from time to time. A position of zero harm closely resembles a position of zero progress.


Could anyone down voting provide counter examples? I propose no one reading this could even produce the devices we're typing on without mining, handling and transporting hazardous materials, and using heavy equipment which will occasionally result in an unfortunate human death and or harm to the environment.


These fines are a scam targeting American companies.


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 don't understand how that is illegal.


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.

[1] http://europa.eu/rapid/press-release_IP-19-1770_en.htm


> Even if the search result and some ads were provided by Google, requiring exclusivity for search adverts was too much.

Which completely ignores why ad networks have those restrictions.

At one point it was common for crummy web pages to sign up for every ad network. All of them. Because every one you signed up for was more money. Then the whole side of the page would be ads from different networks.

The obvious problem is that the advertiser is paying the website for eyeballs, but nobody is ever going to look at all of those ads. It's hard enough to get anyone to look at your ad box when it's the only one on the page. So you're paying for eyeballs and then not getting them. It was like buying a TV ad spot and discovering that the TV network had put it in the middle of an uninterrupted two hour block of just other ads. No surprise that the ad networks then required sites to stop doing that.


If an ad network wants to put restrictions on the volume of ad space in comparison with content on the page, they can do so, but requiring exclusivity isn't the same thing as that.


Measuring the "content on the page" is hopelessly ambiguous and easy to scam.

Even trying to price just based on how many other ad networks there are is problematic. For each additional ad network the value of each ad goes down. Even adding a second one may cut the value more than in half compared to exclusivity, because if the user sees the other network's ads first and they don't appear relevant they may not even look at yours, and a user who sees a larger number of ads may not look closely at any of them.

If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?


>Measuring the "content on the page" is hopelessly ambiguous and easy to scam.

Is it?

It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud. You'd need maybe 300 person-hours to do so, at an overhead-in cost of, let's high-ball it, 100$/hr, which puts you at a cost of $30,000.

If you mean the process is impossible to automate, then don't try to automate it. You can catch 99% of fraud with very low-effort manual review in most industries. That Google doesn't do it doesn't speak to the inability to get it done. It speaks to their unwillingness.

In short: exclusivity is there to choke out other ad networks.

>If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?

The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.


> It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud. You'd need maybe 300 person-hours to do so, at an overhead-in cost of, let's high-ball it, 100$/hr, which puts you at a cost of $30,000.

You're figuring 10k domains in 300 hours, or 1.8min per domain. It's way more expensive than this, and it's an adversarial system. If you have rules about how spammy a site can be and still show your ads many sites are going to try and get as close to the boundary as possible without going over. This means it takes substantial effort to figure out which side of it they're on.

Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains. Spammy sites also can "cloak" so they show up one way to a reviewer at the ad network and another way to a real site visitor.

Manual inspection is definitely a valuable tool, and is something that ad networks use, but that a process like you described would catch 99% of fraud is massively optimistic.

(Disclosure: I work at Google on ad stuff, but not this sort of ad stuff. Speaking for myself and not the company.)


>It's way more expensive than this, and it's an adversarial system

Sure, but I've overstated the hourly costs by an order of magnitude. You can get body shops to do this work very inexpensively.

Making a call as to whether or not they're over the line isn't difficult; you flag the clear bullshit calls and leave the borderline ones after making the contractual terms more conservative than your in practice review would accept.

>Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains

Sure, but we both know your distribution of revenue isn't difficult to parse, nor is auditing methodology difficult.

We have active fraudsters at the top of the iOS and Play stores. The issue isn't that you don't know how best to cast the net to grab everyone. It's that you don't cast it at all to grab anyone.

>but that a process like you described would catch 99% of fraud is massively optimistic.

Not really. Most fraudsters are terrible. Sure a few will slip through the cracks, but that's the case in every industry. That's not an excuse to do nothing. It's especially not an excuse when the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.


> We have active fraudsters at the top of the iOS and Play stores. The issue isn't that you don't know how best to cast the net to grab everyone. It's that you don't cast it at all to grab anyone.

What apps are you thinking of? My guess is that they're apps that are being really careful to stay just inside the bounds of the store policies.

> That's not an excuse to do nothing.

I'm confused why you think ad networks are doing nothing?

> the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.

I wasn't trying to defend that. I just saw your "it's pretty simple to..." and as someone close to the issue wanted to explain ways it's not that simple.


>I wasn't trying to defend that. I just saw your "it's pretty simple to..." and as someone close to the issue wanted to explain ways it's not that simple.

Oh, I thought you were the original poster I was replying to. Sorry about that. Regardless, it's not actually all that complicated at all. Catching all fraud is almost impossible. Catching 90-99% is dead simple. If you don't like my quick and dirty breakdown, make another - the problem's size needs to be 4 orders of magnitude larger before the cost implications become a concern.

That said, there's a very consistent pattern at play here: Organizations and groups that refuse to take action on the basis that they can't catch everything are consistently those that intentionally look the other way in respect of fraud, and digital advertising has a bad rep in this area for a reason: most networks ignore as much fraud as they can get away with.

In any event, locking out other networks doesn't change the fact that the excuse provided for exclusivity is about how many containers are around, not how many networks can bid on that inventory. The rationale for the illegal activity doesn't address the problem at all.


> It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud.

It's not just a matter of fraud. The website could be CNN, but if they're filling their pages with a thousand different ads, none of the individual ads is going to be worth paying for, even if the page also contains legitimate content.

And the thing that's impossible to measure is content volume. If you have one morsel on the page that drives traffic to it, you can easily add arbitrarily more to the bottom that is arguably "content" in order to make the ratio of ads to "content" be whatever you like. At that point you're trying to measure content quality, which is inherently subjective.

> The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.

That's not what I'm saying.

Suppose we do a test. If a page has one ad on it, 0.5% of page visitors buy the product. If it has two ads on it, 0.2% of page visitors buy each advertiser's product, because the extra clutter causes people to pay less attention to both of them.

So then your ad network prices that way. If the site puts your ad on their page with no others, you pay them 5 credits. If they put your ad on their page with someone else's, you pay 2 credits. If they want to use three ad networks then you pay 1 credit and it goes down from there. Just paying proportional to the value of the ad to the advertiser.

Now nobody is going to put two ad networks on the page, because they'd get 2 credits from each ad network (total of 4) instead of getting 5 credits from one. Even if it was 4 vs. 2, you might as well save yourself the transaction costs of using the second network.

The reason exclusivity is worth more isn't that there is less competition so you can charge more, it's that if you clutter up the page with more ads, their value falls off faster than their volume makes up for it.

Moreover, suppose that isn't the case. Showing more ads would produce more value, at least until some threshold number of ads is shown. Then the first ad network would just offer to display more ads on your page and pay you appropriately more for them.

You still end up with only one ad network -- whichever one will pay you the most per unit. The only way two ad networks end up on the same page is by reaching the point that the highest paying ad network knows showing more ads won't produce more advertiser value, and then scamming them by showing more anyway.


I believe Google makes enough cash to hire people who could take care of those spammy websites.

Instead, they consciously choose themselves to be a monopoly.


What do you mean "take care of them"? If they're not allowed to restrict you from displaying their ads next to ads from other networks, that's the exact thing the spammy websites were doing.


They can simply decide to pull their ads and not do business with websites that spam ads, if they think that's detrimental to them or doesn't provide them any value.

Exclusivity contracts give way too much power to Google at the expense of everyone else, if we could simply leave it to Google to decide which websites they want to place advertisements on.

It's like having a retail electronics store placing bad products from company B next to good products from company A. We don't really let A bully the store into exclusivity either, if A doesn't want to be associated with the store they can simply end their contract.


How is refusing to do business with anyone who doesn't give you de facto exclusivity any different than requiring de jure exclusivity?


If they really didn't want to be a monopoly - they'd figure out a way to classify spammers as such and provide a worse selection of ads for them.

Rather, they are specifically locking everyone on their platform.

I do not completely understand your "de facto" vs "de jure" distinction. Unless of course you don't see any other ways of dealing with your clients but a binary yes/no.


From the press release

>Google has abused this market dominance by preventing rivals from competing in the online search advertising intermediation market.

>Based on a broad range of evidence, the Commission found that Google's conduct harmed competition and consumers, and stifled innovation. Google's rivals were unable to grow and offer alternative online search advertising intermediation services to those of Google. As a result, owners of websites had limited options for monetizing space on these websites and were forced to rely almost solely on Google.

This just doesn't make sense to me. So Google offers the website search functionality. It then says "If you want to run ads, you have to use our ads" a few years later Google says "If you want to run ads, you have to give us the best N spots, and all other ads have to be approved by us." Because of this the EU concludes "rivals were unable to grow and offer alternative online search advertising intermediation services."

I am really trying to read the logic some other way but the logic appears to be as follows

1) Google let people set up search pages on individual websites.

2) Google set the terms for ads on those search pages so that Google had exclusive/best ad spots on those search pages.

3) 2 limited competitors ability to develop an alternative to 1.

4) Because Google had a dominate market position, 3 is illegal and should be fined.

This honestly feels pants-on-the-head crazy to me because I do not see how this logic doesn't apply to Google.com. Should Google be forced to let Bing run adds on "google.com/search?q=shoes"? No! Yet if it is "ShoeReviews.com/search?q=shoes" suddenly Google is required to let Bing run adds on it.

Edit: Formatting


I think a thing to keep in mind is this is about antitrust and "Google is dominant in the market for online search advertising intermediation in the EEA". Exclusivity deal was nothing strange but abusing "this market dominance by preventing rivals from competing in the online search advertising intermediation market." wasn't ok.

The exclusivity deal might have been fine were it not for Google's dominant position.


The market dominance is really the key thing here. Just like last time Google was caught pants-down violating it, anti-trust goes like this:

If you use market dominance in one market, to stifle competition in another market, that's anti-trust!

The one market is Search, the other is Advertising.


Based on the bloomberg videoclip showing Vestager explaining the decision: You have your second point (bullet 2) wrong. Google’s exclusivity clause said that if you use google search-box on your site you cannot use any other ad broker on any of you other sites.


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.


>you were prohibited from showing non-Google ads anywhere else on the site.

Can I get a link or a quote to support that? If that is the case then yes, it crosses a line but I didn't see any in the linked article to support that view.

Edit: I reread the article and I think you are wrong. It specifically says on search pages. From the article

>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.

>From 2009, Google started replacing the exclusivity clauses with "premium placement" clauses, which meant publishers had to keep the most profitable space on their search results pages for Google's adverts and they had to request a minimum number of Google adverts.


I think I'm wrong too. Here's the EC press release explaining the rationale:

http://europa.eu/rapid/press-release_IP-19-1770_en.htm


The premium placement clause for a different Google product is still an antitrust violation.

Antitrust law, despite the name, isn't limited to abuses of monopoly power. It includes the use of dominant market positions in one market to reduce competition in another.


Eventually they are going to fine Google for showing only Google ads on Google's search page.



As in: didn't happen, and Google was fined correctly:

"Evidence shows that even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions."


I can't wait to walk into a Walmart and see poster ads for Best Buy near its entrance. Why is Walmart abusing its dominance as a retailer ? (This line of reasoning actually makes sense to some people.)


For starters, Walmart and Google are very different things.

Walmart is a store, and sells things. Best Buy is also a store, and sells many of the same things Walmart sells. They are competitors in the market for selling electronics. Competition between them is good, and so they aren't required to advertise each others' stores.

Google is a search engine. Bing and Yahoo Search are also search engines. They crawl and search the same websites. Competition between them is good, and so they aren't required to advertise each other's search engines.

Google Mail is not a search engine. Google News is not a search engine. YouTube is not a search engine. Google Play is not a search engine. These are all different products from Google Search. Thus, Google giving preferential treatment to these products in its market-dominant search engine would be a textbook example of an antitrust violation: using a dominant market position in one market to interfere in the another market. (It depends on the jurisdiction's specific antitrust laws, but it may not matter where the competitors' products show up in the search results if Google is giving preferential treatment to its own competing products in searches for those products or the search terms that would list those products.)


I understood the argument (it wasn't that complicated to make.) By this reasoning, Google Ads is a different product from Google Search and as such gets preferential treatment by being the only one presented in Google's search results.

It's not hard to see these line of fines against Google for what they are: Money-grabbing attacks. With no knowledge on the matter, as an external observer, I wish this doesn't lead Google to de-prioritize its offerings in Europe.


By this reasoning, Google Ads is a different product from Google Search and as such gets preferential treatment by being the only one presented in Google's search results.

I'm not sure what reasoning you're using, but it appears you aren't grasping the complexity of the argument.

For starters, Google search placement is a fundamental part of the search product, and is a wholly different product from Google Ads (which don't show up alongside search results). Search results and display ads aren't just different products--they're different markets (for example, print ads and tv ads are also advertising but are wholly separate forms of advertising from each other and from display ads and from search placement). So paying for placement in search results isn't an antitrust issue.

On the other hand, if buying search placement was contingent on also buying Google Ads, that would be a textbook example of antitrust abuse because Google's dominance in the search engine market is being used to leverage and interfere with the display ads market.


Your posts in this thread have been accurate wrt competition law.

It's interesting to see how many people are shocked abuse of dominant market position remedies. I think enforcement has been so lax that many people casually assume anti-competitive behavior is the de-facto norm.


Not sure you understood why Google was fined. Search placement is irrelevant in this context. This pertains to search results restricted to a third-party site, embedded on that site.

If you want to make a general argument about Search placement that is conditioned on plainly wrong assumptions (Google _never_ prioritizes organic search results based on buying Google Ads) then, sure, go right ahead.


If you want to go down the slippery road of analogies, a better one would be:

Google is Walmart, offering all kinds of products. Carrying Kellog’s cereals (and many others).

Recently it started producing its own brand, Cerealify. Once it started producing its own brand, it’s the only brand you can now buy at Walmart. It’s also the only brand featured in marketing materials (catalogs, flyers, posters). Kelloggs, and other brands, can only be found in a warehouse 5 miles away.

How’s that for competition?


The Google Search page is not a market place and the original argument against Google is absurd. For instance, if I search for "The Art of Computer Programming" on Google, the first result through which I can actually buy the books is Amazon, arguably one of the largest competitors of Google.

I understand the desire of playing Devil's Advocate here, but it's difficult to stomach. Google has been such a force for positive change globally that it's hard to see the EU as the good guys in this case.


Does Google being "such a force for positive change globally" requires it to abuse its dominant position in the market to promote its unrelated products?


False premise: it doesn't.


@gamblor956 explained it way better than I could ever hope to here: https://news.ycombinator.com/item?id=19444072 and https://news.ycombinator.com/item?id=19445447


Positive change globally? Source?


No, a better analogy would be if they conditioned Kelloggs to only sell on Walmart, if they want to sell on Walmart at all.


Except the search engine business is not profit making without ADs.

Google is like yellow page, not Walmart.


Replace Walmart in my example with Yellow Pages. Same argument still stands.


I'm not sure if you're saying that the fine makes sense or you're being sarcastic and saying it doesn't.


I'm saying it doesn't. Google doesn't prioritize its own products on its organic search results.


Google is leveraging its power in search by making sites not display ads from its competitors if they wish to use their search.

Sounds uncompetitive to me.


Not leveraging dominance in one area to push a different area is the basis of our anti-monopoly laws.


While I agreed the shopping issue was an issue of leveraging dominance, this seems more reasonable, if you want to monitize our free service, you have to use us to do it. At the moment I cannot come up with an example of that situation that would be an antitrust violation.


You literally just provided the example.

Product A: dominant search product

Product B: non-dominant advertising product.

If you want to use product A, you need to also use product B. That alone is sufficient to create an antitrust violation. It's almost literally the textbook example of an antitrust violation.

But Google didn't stop there--they required exclusivity for product B for several years, and even after that ended they still required premium placement. Either way, they just compounded the severity of the antitrust violation.


Product A is not profit making, but it bring public goods.

Do we want to subsidize it? Or just let it die as the free market works?


Product A, i.e., the search engine, is not just profit-making, it's been Google's primary source of revenue for the the past decade. Google makes billions on paid search results placement. It's the foundation of their business model. Display Ads, Android, etc., are relative drops in the bucket in comparison.

So, do we want to subsidize it? No, because it's a private product offered for profit.

Should we let it die? Sure. Google's not the best search engine anymore, just the biggest. If it has to face some competition, they'll start improving the product again, which benefits everyone. And if it doesn't improve the product, it deserves to die.


It might be that I don't see how what you classify as Product A and Product B are different products. I see Product B as the monetization feature of Product A. If I "squint" I can see how they are different products but I am not convinced.


Product A is the search engine, so you're paying for search results placement, which is how Google monetizes search.

Product B is display ads, which are displayed on other (almost always non-Google) websites. No searching involved...

I don't see how they're even remotely the same product. They're similar in the sense that their forms of advertising, but they're very different forms of advertising. Search placement is intentional advertising (in the sense of targeting prospective customer's "intent" to use/buy) while display ads are awareness advertising. The proof is in the very different rates: search engine placement terms can cost several dollars per search. That same amount could buy hundreds or even millions of display impressions.


European Commission anti-trust rules are stricter and have more teeth than other large market's 100 year old laws. They don't borrow from their case law either.

Its current embodiment is only 10 years old so they are at the stage where they are required to make a point. If its too vague, which would fit your observation, challenge it and see what the venues for appeal or courts are in that supernational government.


Was this service free? It seems that if sites were modifying the results page to re-arrange ads, they were probably using the Google Custom Search JSON API, which is a paid service ($5/1000 queries): https://developers.google.com/custom-search/v1/overview#Pric...


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.


Official Press Release from European Commission: http://europa.eu/rapid/press-release_IP-19-1770_en.htm


With 500 million EU citizens, that's about €3 per person.

This makes me wonder, how much does Google make from showing ads to one person?


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?

P.S. please feel free to correct my figures!


This really puts things in to perspective. Subscription startups looking to get some percentage of the population to pay $10 a month can never reach the scale of google advertising when they are extracting nearly that much value on average from every single person.


Well that's part of the problem inherent with the subscription model, isn't it?

Google can make >$100 a click for ads on mortgages or insurance keywords, but subscription models are locked in to revenue that doesn't scale with the category of use - unless they become some sort of affiliate service.


A friend of mine bought a house from a cost-per-click ad...

If the seller has $1000 per click, that's really going to distort the market...


If you are comparing with Netflix, then you should consider family accounts, where many people share that $8/m


> P.S. please feel free to correct my figures!

Presumably the value of advertising is highly correlated to the amount of money you spend (on things you have some choice over).

Disposable income is a strongly skewed distribution (across countries, within most countries).

An average won't help you much if you want too know how much Google makes off you!


That $100/person isn’t spending by individual users. They are spent by companies advertising and paying for clicks.

Guess how many times an average person clicks on an ad knowingly/unknowingly.


So: who is giving the money to the companies that they use for advertising?


other companies ?


Consumers...


Tax payers


That's really not relevant.


Perhaps in the sense that we all (indirectly) pay the tax (i.e. cost) of advertising, whether we use Google or not.


Ok, I know.

_What are_ consumers?


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.


There are plenty of keywords where it's 10x that Plumber PPC keywords can be £20-40 in the UK


Hopefully far more than €3 a year.

What price do we sell our personal data for?


The price of using Google.com, YouTube.com, Gmail.com and many many other services, for free.


And I thought I was "paying" for that by having 15 minutes long "ads" thrown at me every for every 5 minutes of content I watch.

YouTube seems to be getting really bad in that regard, even worse than TV.


That's not quite right.

While you can get ads that are 15 minutes long they can always be skipped within 5 seconds. That's not even comparable to television.


That might be true, but one of my use-cases for YouTube is listening to music, over a tablet, while I shower

So these 15-minute "ads" pretty much lead to the situation that halfway through my shower I won't be listening to music anymore, but rather some tutorial on how to best light a photoshoot or a "documentary" how Hezbollah is destroying Europe.

Don't get me wrong here: They can have their ads, but throwing 15-minute ads between videos that average out at around 3-8 minutes just feels like a very bold choice.

And it's not like watching that 15-minute ad means you won't be bothered by them for a while, you can watch it and after the next 3 minute song, there will be yet another ad.


Eh. YouTube isn't a very good platform for music, and it's even worse if you aren't paying for the premium service. Why wouldn't you use something like Spotify?


If your use case is using a video streaming service to listen to music then perhaps you should consider using something else instead of fighting against the tide. Don't get me wrong, I do the same from time to time, but typically when I listen to music I'm not loading up YouTube...


The dynamic playlists actually make YouTube a pretty decent music streaming service. I can find a song I like and just create a "mix" out of it, featuring similar songs, with just 1 click.

Having the actual music video with the music is also a very nice extra, some of these can make a song like 10 times as good.

If the YouTube premium wouldn't be so expensive (asking 16€ per month over here) I'd already signed up just for getting ad-free music.


I've gotten some 20+ seconds unskipable ads. That's the moment when I simply switched to MPV for watching youtube videos as the ads keep squeezing through every adblock filter I've tried once in a while.


Perhaps I should have worded my statement a little differently. I meant that you can always skip the ads that are essentially entire videos.


not _always_

There are ads on Youtube that cannot be skipped, and they can be much longer than 5-6 seconds.


Block the ads. You have every right to do so. There is zero obligation to watch ads. If a company like Google can afford to operate a service like YouTube, then putting it up in the first place is the cost of doing business. I happily block ads on all devices I use and am in control over, even at work.

Pi-hole, uBlock Origin (even kills the adblock detectors), Privacy Badger, Decentraleyes, Tracking Token Stripper, Webmail Ad Blocker, etc.

Ads. What ads? You have a VPN set up on your home network, you can pass your mobile phone through it so as not to get ads even while away.


Haven't found a good way to do that on my tablet (iPad), yet. I have tried adding known ad-networks to my router-blocklist, it does not seem to impact YouTube at all.

I guess I really gotta look into building myself a Pi-hole.



If everyone paid for youtube, they'd still show you ads every five minutes and harvest your information. Then people would be telling you that you have to suffer this because you don't pay for the bonus package.


Sure, but I for one would pay €3 a month to not have google harvest any data from me. If they're making €100 a month from me, that's one thing.


around $70 p. a. IIRC.


> They were setting chrome as default browser in android. Also they did not allow changing the default search engine so easily.

Isn't this the same case with Safari on iOS devices?

Update: I posted this before the motivation was published.


I guess the difference is market share...


No, not really.

Basically the way the EU sees it, Google has a monopoly in a market: mobile operating systems. That is, if you're an OEM and you want to sell a device with an operating system, Google is currently the only place you can really turn. Apple exists but since it doesn't sell its operating system, it's not a participant in this market.

So the EU saw Google saying to OEMs "you can have Android but you have to install our stuff on it or pay extra" and decided that Google was using its monopoly position in one market (mobile OS) to give itself an advantage in other markets (app stores, browsers, search). They see this as anti-competitive.


As far as I know, Android is open source and any OEM is free to use it without asking permission. The licensing program is for the right to install proprietary Google apps like the Play Store or Google Maps. There are plenty of Chinese OEMs who aren't licensed and sell phones without the Play store.


Amazon tried to sell Android without Google Play, but the resulting Amazon Fire Phone didn't do very well. Unless Google is banned in your country like in China, no OEM wants to risk skipping out on Google Play.


The code is open source but "Android" is trademarked. You can't call it an "Android" phone unless Google lets you.


Not necessarily -- trademark infringement requires an element of deception or confusion, not just any usage of the mark.

If an OEM sold a phone with a stock AOSP build, I think they'd be fine with calling it "Android" without permission. Google might attempt to enforce their mark anyway, but they wouldn't have much of a case.

If the phone ran a fork like LineageOS, the OEM would need to be more careful about their use of the mark, but I imagine they'd still be okay with language like "Android-based".


Yes, and that directly causes a device to fail SafetyNet Attestation which can cause some third-party apps to not work even with sideloading/different app store.

Edit: like Netflix, Hulu, and Snapchat


Google could satisfy EU by cancelling OEM Android licensing programming and reducing consumer choice to Google phones only, relegating OEMs to suppliers like "good" Apple, and putting most OEMs out of business. Good job, EU.


Google could do that, but it would hurt their business tremendously, as the amount of diverse brands which provide their own unique flavor on top of Android is what helps them keep this dominance.

Reducing the choice to just Google phones running Android will spark other providers to develop their own OS and increase competition in the market, which would indeed lead a great deal of people to say "Good job, EU" if the EU was the catalyst for such a scenario.


The reason android exists was to allow OEMs to compete with Apple.

Google could shut it down and only publish their own phones, but they don't have the chops to become a premier customer goods maker. The field would be free for Apple until Samsung catches up. In the end Google lose negotiation power in getting their search engine, browser and services on Apple's and Samsung phones.

Basically they would be the main loser in the move.


And the fact that iOS is installed on devices made by Apple itself. Android is the OS used by different phone manufacturers.


If iOS would have the marketshare of Android, it would be hit by the same regulations.


No, if Apple opened it's OS to OEMs, it would be hit.

Apple isn't getting fined for it's app store which is essentially the same structure as Google's OEM hardware setup


> Apple isn't getting fined for it's app store

They're working on that, give it some time. The complaint from Spotify gets the ball rolling. The EU will do the rest. Two or three years from now they'll have a $4 billion fine for Apple.

"Spotify announced this morning that it’s filed an antitrust complaint against Apple with the European Union, alleging that the iPhone maker is harming consumer choice and stifling innovation via the rules it enforces on the App Store."

https://www.theverge.com/2019/3/13/18263453/spotify-apple-ap...


It's based on marketshare. iOS doesn't have enough marketshare on the smartphone market to be bothered by those laws. If apple was controlling the whole smartphone market, it could fall under those laws, even if its operating system wasn't open to other manufacturer.


Agreed, and this needs to stop in my opinion. The EU makes an enormous amount of money by suing tech-giants over and over again without doing enough research to know what companies in this sector are doing.


They have a very good idea of what the tech giants are doing, don't you worry.


Those aren't based on nothing. There is laws and being a tech giant doesn't grant the right to go around those. If those fines aren't justified, those companies can use the justice system in place to fight back, like everybody else.

It's not a free for all, get free money from tech companies with no legal background.

Antitrust laws aren't specific to EU by the way.


I was wondering where funds from such a fine go:

"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."


That happens to most fines, everywhere.

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.


> the commissioner responsible (Vestager) is somewhat likely to leave the commission after the May elections anyway, because of another pro-competition decision

Nah, EU commissioners are very unlikely to stay in their post when the Commission changes anyway, regardless of performance. That's because they are an expression of national governments' priorities at the time of commission composition (every government gets 1 commissioner, and usually tries to place it in an area it is particularly interested in - which obviously changes when a government changes "colour").

This has become even more true ever since EuroParliament obtained a meaningful vote on approving or rejecting the Commission. Because the Commission President is now a political figure expressed by the party with the most votes in EuroElections, it is almost inevitably bound to change every 5 years, when Parliament changes; when the President changes, the whole Commission usually changes as well. I fully expect this to happen this year.

In the past, Commissions would change on a different schedule, without any real vote, and it was mostly seen as an administrative body anyway. This meant a President would not change until it effectively resigned or lost the trust of all national governments, which in turn allowed other commissioners to stay on if they were already working together well, with EUParliament just rubber-stamping. This changed after the corruption scandal of 1999.


> The most likely explanation is that rather high standards of enforcement and corporate governance in the US require less EU intervention.

Or maybe the american political influence is stronger?


It would need to be stronger than EU member states' influence, which seems unlikely. I also don't remember ever hearing of even attempts to exert influence on these investigations.

Note that such agency actions are firewalled from even their EU/US/national political leadership. Even if Trump managed to convince Merkel to intervene, she wouldn't really be able to. To illustrate with a reverse example: Imagine Macron trying to get to get to a judge in a California District Court. There are multiple layers in between where they would tend to consider the call a prank and hang up.


And maybe more capital is directed towards lawyers and litigation making it more expensive and difficult to extract cash from large US companies.


> - Fines account for <5% of the EU's budget

This is maybe not as comforting as you think it sounds. 1.5B is 1% of the budget that you describe below, which is non-trivial -- that's make or break money. I'm guessing it exceeds the total annual contribution of several member states (I tried to find the actual budget, but talk about incomprehensible documents [1] -- what's an "own resource"? What's with the obsession with sugar?). To that end it seems like fines like this are a critical part of the EU's budget.

> If you sum up all the fines collected by continent

I'm wondering if you have a reference for that -- I can't really find anything definitive and it would be interesting as a data point.

[1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A...


I think I know where you are coming from, for a nation 1% is significant, but I don't think you realize what the EU budget is used for.

47% subsidies for farmers, 30% regional support subsidies (e.g. they might co-found an R&D project in an outermost region in a country):

https://en.wikipedia.org/wiki/Budget_of_the_European_Union#P...

So mostly subsidies. If there's a deficit, they can cut the regional subsidies which I believe are mostly individual projects with relatively short timespans.

The farming subsidy is more like social security, I think you'd have riots in France if you cut that significantly. Which is sad.


That is a good point. I guess in theory the fact that the amounts are rebated from the next budget could provide an incentive for individual members to push for increased fines, but given the reduction would be proportional, and national budgets are so much larger than these amounts, it wouldn't really amount to a significant national budget windfall.


> rather high standards of enforcement and corporate governance in the US require less EU intervention

More likely that US companies are so comparatively wealthy that even apparently large fines aren't as large as fraction of revenue. Anchoring fallacy.


That's one part of the story. There's only one tech company in all of Europe that can easily digest a $1.7 billion fine.

SAP is Europe's most profitable tech company by far. About $4.5 billion in net income ($7b in operating income).

The US has at least 16 tech companies at that level of profit or higher.

Just Microsoft + Google + Amazon + Facebook + Apple = $185 billion in annual operating income.

In terms of sales, those five combined companies are the size of Turkey or Saudia Arabia in GDP (they'd be around the 19th or 18th largest economy in the world).


Is profit and annual operating income supposed to be equivalent?


I used operating income for the US tech companies because the recent accounting changes can make net income an unusually volatile figure. SAP's operating income had been stable for several years so I guessed it had remained pretty similar to 2017 figures. It did jump decently for 2018, to around the high $6.x billion area. Going on that (a proper direct comparison), it's more like ~27 SAPs.


Operating income is usually a better way of measuring the health of a business than net profit since it excludes one-time charges and taxes.


I was using economic activity (i. e. revenue) in the EU, not worldwide. A company not operating in the EU shouldn't be fined, obviously.


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


1.5b€ isn't a lot; Germany + France + UK = 5 Trillion (5,000 billion) as a sibling comment mentioned. They don't care about 1 billion here or there.


It would be a lot for any one of Google's competitors to fight over. That is, if the money were e.g. supposed to go directly to the competitors that were harmed here, there would be a huge allocation fight within minutes of this decision...


But it doesn't, it goes into the EU budget.


exactly. so it sounds reasonable to me. what are debating again? :P


Where did you expect them to go?


I had no idea, and was just sharing what I found


"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.


If you made the case that everything they said about where the fines go instead of budget is wrong, sure you would be correct. I would expect you to put forward an argument with a bit more substance than "taxes will never go down, I guarantee it" in that case, however.


> i don't see my taxes dropping because ppl get fined

What were your tax contributions to the EU last year compared with the year before?


That's small money for the Google.

Last year they gave Google €4.34bn fine and in year 2017 they gave Google €2.42bn fine.


Basically, at this point I'm sure there is a standing ~€2.5 bn section in Google's annual budget simply labeled "misc. EU fines". If they manage to keep it under €2bn in any given year they probably consider that a win and pay out bonuses to their legal team.


The fine is only part of the EUC action, the fined entity has also the obligation to change their behavior as suggested by EUC to stop asap their abusive actions.


How do you reconcile this with the knowledge they’ve been fine $x billion every year for the past 3 years (at least?)?

At what point does Big Corp run out of things to abuse?

If the fines just become a cost of doing business the finance and legal teams can probably get creative and invent new ways of mashing up old abuses over time.

I think the underlying theme here, then, is that the fines are necessary but not sufficient.


There's nothing really stopping the EU from making the fines larger if they don't correct their behavior. The point of a fine like this isn't to completely cripple a company, but to make it understand that there are very real consequences.

It's very simplistic to look at their yearly revenue and say they can just absorb it. If the money they made off of an activity like this was less than the fine, absorbing it won't make sense.


Even if they absorb it, accounting for R&D and other expenses on a product, the profit margin could be sufficiently ruined for the entire product to no longer be viable or a competitor could take over the market easily.


All the fines have been about the same time period (2010-2016), but on different products (Shopping, Android and now Adsense). It's not Google changing stuff and getting fined again.


That's why there's this provision in the official EU press release:

Finally, Google is also liable to face civil actions for damages that can be brought before the courts of the Member States by any person or business affected by its anti-competitive behaviour. The new EU Antitrust Damages Directive makes it easier for victims of anti-competitive practices to obtain damages.


This is why at some point executives need to face potential prison time. The EU should put the requirements to stop the abuse and if next year the change hasn’t taken place, investigate individuals responsible.


That's right. They say corporations are people too, however corporations aren't sent to jail. They aren't barred from voting. They have more rights than human people.

Imagine if Google went to jail and had to work for 13 cents an hour making license plates.


Similarly, there's probably a ~€2.5 bn line item in the EU budget that reads "misc. Google fines". ;)


The legal team must be proud of their achievement


Unlikely: google has a 2017 revenue of 109.65 Billion US dollars. that's up to 5 % (conversion rates guessed) of it's total REVENUE. This will hurt their profits even more. A fine of this magnitude really makes the difference between funding a new product / moonshot or not I figure.


Google's free cash flow in 2018 was around 21 billion, and Europe/Middle East/Africa make up around 33% of their business. If you assume that the margins and capex in that area is similar, then the EU fines have nearly exceeded Europe's portion of Google's FCF for 2018.


Nah, I think 10x the fine and you're really starting to hurt.


50% of revenue sounds more like chopping off an arm or a leg than starting to hurt.


I was kidding, of course. Profit margins, even for Google, let alone a small digital business, are a fraction of revenue, typically negative.


That's exactly what needs to happen. Google needs to lose a leg or an arm. Something that significant, but in corporate terms. Like maybe force them to divest of European holdings. Separate that business from North American operations. Or just exile then from Europe all together.


It's probably what they would normally pay in taxes if it wasn't for the current tax evasion schemes in play.


It does have some effect; rumors are that Google will start a Browser-Choice dialog similar to Microsoft on Android soon. [https://www.golem.de/news/android-google-fragt-nutzer-kuenft...]


To my knowledge each country within the EU can also seperately fine Google. It could add up very quickly.

Personally i also think getting fined constantly is not a reliable business model. :)


It's a risk / reward thing, if getting fined for less than what they earned (both in actual money and in removing competition from the equation) then it's worth the risk.


You forgot to state the follow up: these fines require changes, and lacking changes get higher very quickly. Losing 1/3 of you advertisement-market is not profitable either if it gets to that.


These top EU fines so far are extremely large, larger than anything a US regulator or jury orders, perhaps larger than the largest ever US fine.


Just because they are larger than US doesn’t mean they are extremely large - I would argue it’s US fines that are too small, and regulators being too mild.

As for larger ever US fine - perhaps for Google. US can also be rough.


It seems like EU's policy of retribution on Big Tech for US fining European banks.

https://www.fnlondon.com/articles/european-banks-face-dispro...


A good faith interpretation would be that the US has the most advanced system for financial regulation, while the EU is better (or emphasises) antitrust and privacy regulation.

Both seem to perfectly consistent with New York being the world's premier financial center and Europe being somewhat renown for stronger consumer protection.

(which leaves Volkswagen as a terribly embarrassing example of regulatory capture in Germany)


To be fair, roundup has a magical characteristic in only starting to cause cancer once Monsanto was no longer a US company.

Some German states own parts of VW and clearly would prefer to believe it to be honest mistake VW has learned from. No one should be surprised that the Deutsche Bank are criminals either. I dont think those cases are anything more then corruption preventing proper prosecution. Big corporations simply get away with a lot of stuff if its politically inconvenient. I mean the HSBC laundered billions for drug cartels. Heckler and Koch breached weapon embargos. Non of that is in any way a grey area but plain and simply criminal conspiracy.


> A good faith interpretation would be that the US has the most advanced system for financial regulation

One only has to take a peek at the HSBC cartel scandals to know that's patently bullshit.


?

HSBC is a British bank. Yet, skimming https://en.wikipedia.org/wiki/HSBC#Controversies it appears almost all investigations and fines were the result of SEC and other US investigations.


Watch the HSBC episode of 'Dirty Money' on Netflix. They got away with a tiny slap on the wrist for absolutely glaring circumvention of anti money laundering rules. The best way I've heard it said is America has some of the strongest financial regulations in the world, there's just laughably weak enforcement of those regulations.


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...


Understand that there are two "kinds" of custom search. One, which is discussed in the BBC article is "AdSense for Search" which is and advertising program you could engage when you put a Google search box on your web site.

The other kind, which is not discussed here, is where you have a web front end like startpage.com or duckduckgo.com which is making an API call to a search index in response to your query. In the US, the two english language indexes with decent precision and recall are provided by Google and Bing[1]. One of Google's big partners there is Infospace which uses Google results in many of their properties. That said, when you use Google results in your search "engine" web page, you are bound by a different contract than the AdSense contract. And, like the AdSense contract, it is (or at least was) pretty restrictive on what sort of advertising you could do around Google's results.

[1] Bing either directly or through Yahoo!'s BOSS API if that is still a thing.


Is there an other article with some background / explanation what Google did in this case? That they were "blocking others" doesn't tell me much.

Edit: The linked article is now updated, at the time it was basically just a paragraph stating the fine.


It's in the official press release: http://europa.eu/rapid/press-release_IP-19-1770_en.htm

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.

From: http://europa.eu/rapid/press-release_IP-19-1770_en.htm


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."""



They were setting chrome as default browser in android. Also they did not allow chaning the default search engine so easily.


I believe you are referring to a different case than this one. That Android decision was in July 2018:

> In July 2018, the Commission fined Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen the dominance of Google's search engine.

http://europa.eu/rapid/press-release_IP-18-4581_en.htm


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.


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