The Luxembourg General Court gave Google a pass in September 2024, knocking out the Commission’s whopping €1.49 bn fine; honestly, many of us in the tech risk sector expected a quick confirmation of the penalty, making this annulment a massive surprise.
Judges found the Commission’s analysis wanting, specifically because the Brussels outfit failed to demonstrate these contracts actually restricted competitive market activity, only that they might have, which is a serious distinction. The regulator, they argued, did not sufficiently consider the duration of agreements—many publishers could quit, see—or the crucial counterfactual: what would the market have looked like if Google had not written the clauses into existence. They were asking for detailed economic proofs, a tough ask when you simply look at an exclusive deal.
Facts and Judicial Struggle
Back in 2019, the European Commission hit Google with that huge penalty for abusing its dominant position in online search advertising; the market chatter never died down. Google acts as the middleman, running AdSense for Search, a program which displays advertisements on third-party publisher search pages. The problem was Google’s contracts with its big partners, running from 2006 to 2016, which contained exclusivity rules, later changed to placement clauses and prior authorisation clauses. The Commission maintained these lock-ins prevented competitors like Microsoft or Yahoo from selling their search ads, plain and simple, a foreclosure tactic.
Google appealed the decision to the General Court. The judges reasoned that if a publisher prefers Google simply because the tech firm offers a better service or higher revenue, the existence of an exclusivity clause might not decide the fate of competition. Moreover, the judges in Luxembourg were not convinced about the prior authorisation clauses, finding the Commission assumed a veto power Google did not systematically exercise, complicating the matter. They annulled the decision because the regulator had relied too heavily on the form of the contracts rather than their practical effects.
The Appeal
You cannot blame the Commission for fighting back, lodging an appeal with the Court of Justice on 3 December 2024. They want the court to scrap the GC judgment, restore their fine, and make a strong statement. The General Court made legal errors, the Commission asserts, setting the evidentiary standard way too high for proving anti-competitive capability. Commission lawyers argue they should not need to prove granular market effects, the kind of deep dive the GC demanded, when a dominant firm uses exclusive terms; they also contend the GC misread the facts about contract termination options.
This whole mess touches on the debate surrounding the as efficient competitor (AEC) test, whether regulators must essentially perform a simulation to justify their decision, even if the established case law for this type of exclusivity abuse suggests otherwise, maybe. The Commission argues the GC distorted the facts regarding the duration of the clauses and the opportunities for publishers to switch to scrappy rivals.
Comment
This whole rigmarole sets a difficult precedent for future Article 102 TFEU cases, forcing the regulator to become an economic forecasting agency for every restriction, not a great look. Google, the perennial defendant in Luxembourg, already fights the Shopping (Case C-48/22 P) and Android (Case C-433/24 P) decisions, so this AdSense appeal just adds another layer to their competition woes. The outcome will decide if a dominant firm’s exclusivity agreements require an extensive, effects-based economic proof, or if the court will simply look at the anti-competitive nature of the restriction itself. We think the CJEU needs to figure this mess out swiftly.