[30 Marks] CASE STUDY Google hit with 1.5 billion antitrust fine by EU[1] The third antitrust fine the European Union has levied against the US tech giant. Google has been hit with a new antitrust fine from the European Union totaling 1.5 billion. In a press conference this morning, EU antitrust commissioner Margrethe Vestager said that the tech giant had abused its dominant position by forcing customers of its AdSense business to sign contracts stating they would not accept advertising from rival search engines. Said Vestager: "The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate." The fine is the third major penalty the EU has levied against the tech giant in as many years, and closes its last open probe of the firm. Google was fined a record 4.3 billion last year for abusing its market dominance in mobile, and 2.4 billion the year before that for manipulating shopping search results. Google is currently appealing both cases. With the new penalty, Google's total EU antitrust bill now stands at 8.2 billion ($9.3 billion). Today's fine was lower than the previous two as Google actively worked with the European Commission to change its AdSense policies after the EU announced its case in 2016. The policy under scrutiny dates back to 2006. Then, Google started selling customers its AdSense for Search product. This let companies like retailers and newspapers place a Google search box on their website. When visitors used the search box, Google showed them ads and split the commission with the website's owners. But, Google also made customers sign contracts forbidding them from including rival search engines on their sites alongside Google's own. In 2009, Google allowed the inclusion of rival search engines as long as Google's was more prominent. In 2016, around the time the EU announced its case, the company removed these terms altogether. In a press statement, Google's SVP of global affairs, Kent Walker, said: "We've always agreed that healthy, thriving markets are in everyone's interest. We've already made a wide range of changes to our products to address the Commission's concerns. Over the next few months, we'll be making further updates to give more visibility to rivals in Europe." Google's climb-down reflects, in part, AdSense's diminishing importance for the firm. The business was a steady earner, but never a major component of the company's revenue. According to Bloomberg, AdSense contributed less than 20 percent of the company's income in 2015 and has declined ever since. "If you look at the annual reports, AdSense is less and less relevant," Bloomberg Intelligence analyst Aitor Ortiz told the publication. During the press conference this morning, commissioner Vestager also offered updates on Google's responses to its other antitrust fines. For example, with regards to its manipulation of shopping search results, Vestager said that changes Google made after the EU's case increased the visibility of rivals from 6 percent of search results to 40 percent. Vestager also noted that in response to the antitrust case made against Android, Google has decided this week to give users a choice about the browser and search engine they use on their phones (rather than simply pre-installing Google's own services). "We've seen in the past that a choice screen can be an effective way to promote user choice," said Vestager. "It is welcome that Google is stepping up its effort and we will watch closely to see how the choice-screen mechanism evolves." Although today's fine brings an end to EU's current trilogy of open probes, the organization is still looking at a number of other areas of Google's business and could open new cases in future. Vestager mentioned the search market for jobs and local listings as areas of scrutiny. "We keep getting complaints from people who are concerned about how these markets work, so we will keep doing our job," said Vestager. "For me, the most important thing here is to enable user choice." [1] Vincent, J. (2019). Google hit with 1.5 billion antitrust fine by EU. (Online). Available at: https://www.theverge.com/2019/3/20/18270891/google-eu-antitrust-fine-adsense-advertising [Accessed on 10 October 2021] Answer ALL the questions in this section. Question 1 (10 Marks) Identify the exact scandal of Google. Explain how this is an unethical business practice example