In Google vs. EU, a $2.7B fine could just be the start

The Guardian (Charlottetown) - - OBITUARIES - BY RYAN NAKASHIMA

Google’s par­ent com­pany Al­pha­bet can eas­ily af­ford the $2.7 bil­lion write-down it’s tak­ing to cover a big an­titrust fine in Europe. But it might find it harder to shrug off the rest of the Euro­pean reg­u­la­tory as­sault that’s headed its way.

In June, a Euro­pean Com­mis­sion rul­ing slapped down Google for abus­ing its mar­ket dom­i­nance in search by un­fairly di­rect­ing vis­i­tors to its com­par­i­son shop­ping ser­vice, Google Shop­ping, to the detri­ment of its ri­vals. The reg­u­la­tors not only im­posed a huge fine, they also in­sisted that Google change the way it pro­vides search re­sults in Europe.

Al­pha­bet is still mulling an ap­peal of that rul­ing. But it could take years to get a rul­ing at the Euro­pean Court of Jus­tice. And that case is only the first of sev­eral such in­ves­ti­ga­tions that have em­broiled Google in Europe, a sit­u­a­tion that raises uncer­tainty about its abil­ity to op­er­ate freely on the con­ti­nent go­ing for­ward.

Al­pha­bet Inc. re­ported sec­ond-quar­ter earn­ings were $3.52 bil­lion, down 28 per cent from $4.88 bil­lion a year ear­lier; that fig­ure in­cludes the ef­fect of the $2.7 bil­lion Euro­pean fine. Rev­enues rose 19 per cent to $20.9 bil­lion af­ter sub­tract­ing com­mis­sions it paid out, up from $17.5 bil­lion.

Google faces the prospect of ad­di­tional fines if it doesn’t change the way it dis­plays Google Shop­ping re­sults in Europe by late Septem­ber.

“These things tend to hob­ble a com­pany’s be­hav­iour even if there isn’t a de­ci­sion,” says Jonathan Taplin, a former pro­fes­sor at Univer­sity of Southern Cal­i­for­nia and au­thor of “Move Fast and Break Things: How Google, Face­book and Ama­zon Have Cor­nered Cul­ture and Un­der­mined Democ­racy.” ”I don’t think it’s the end, I think it’s the be­gin­ning.“

Google has of­fered to make con­ces­sions on mul­ti­ple oc­ca­sions in an at­tempt to set­tle Europe’s 7-year-old an­titrust probe. But pre­vi­ous of­fers were still con­sid­ered to drive the vast ma­jor­ity of clicks to­ward Google’s ser­vices - its key source of rev­enue from ad­ver­tis­ers.

That’s what makes the cur­rent ne­go­ti­a­tions over what it can do to avoid fur­ther fines con­fus­ing, says Mark Bal­lard, head of re­search for Merkle, an ad agency that rep­re­sents Gap, Crate&Bar­rel and other big on­line ad spenders.

“There’s a lot of uncer­tainty,” he says. “Un­til we see that plan it’s go­ing to be hard to pre­dict what kind of im­pact this will have.”

Al­pha­bet shares closed up 0.5 per cent at $998.31, but dropped more than 3 per cent in af­ter-hours trad­ing, to $968.

This story has been cor­rected to show that rev­enue rose 19 per cent, not 21 per cent, to $20.9 bil­lion, not $26 bil­lion, af­ter sub­tract­ing com­mis­sions it paid out, up from $17.5 bil­lion, not $21.5 bil­lion.

AP PHOTO

This Tuesday, July 19, 2016, file photo shows the Google logo at the com­pany’s head­quar­ters in Moun­tain View, Calif. Google par­ent Al­pha­bet is tak­ing a $2.7 bil­lion write-down to cover a large fine EU an­titrust en­forcers as­sessed in June 2017.

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