The European Union today fined Google LLC 1.49 billion euros, or about $1.7 billion, after finding that the company created competitive obstacles for rivals in the online advertising market.

Most of Google’s ad revenue comes from its own search engine, but it also serves up promotions on other properties. Online publishers and other website operators partner with the Alphabet Inc. subsidiary to display personalized ads for their visitors. According to the EU, Google added certain clauses to its contracts with website operators that limited the revenue opportunities of competitors.

At issue are the ads that people see when they use a website’s built-in search function to look for content. The EU found that Google included an exclusivity provision in some contracts that prohibited website operators from using competitors’ products to serve up search ads.

“This market is important because it could serve as an entry point for competitors, including other search providers and online advertising platforms,” EU antitrust commissioner Margrethe Vestager said in a statement. “By gaining a foothold in online advertising brokerage, they could grow their business and try to challenge Google in the general search advertising market.”

Google first introduced the exclusivity provision into its contracts in 2006. The company started replacing it in 2009 with a somewhat less restrictive clause that the EU has also found to violate antitrust laws.

This second clause didn’t prevent website operators from using competing search ads but required that they source a certain minimum number of adverts from Google. Moreover, it mandated that these ads be placed on the most visible sections of search results pages where they could generate the most revenue.

The third and final contractual restriction that the EU has taken issue with gave Google veto rights on changes that website operators made to the way they displayed their search ads. These provisions were active until 2016, the year European regulators started investigating the matter.

“There was no reason for Google to include these restrictive clauses in its contracts, except to keep its rivals out of the market,” Vestager stated. “This is why we’ve concluded that, between 2006 and 2016, Google’s behaviour was illegal under EU antitrust rules.”

The $1.7 billion penalty marks the third time in two years that the EU has fined Google over antitrust violations. Last July, regulators ordered the company to pay $5 billion for requiring handset makers to preinstall its apps on their Android devices. Earlier, Google was slapped with a $2.7 billion fine for unfairly prioritizing its Google Shopping service over rivals in search results.

Kent Walker, Google’s senior vice president of global affairs, said in a statement that “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.”

Photo: Niharb/Flickr