Google hit with record fine by EU reg­u­la­tors

Pun­ish­ment of €2.4bn for tam­per­ing with re­sults to edge out smaller ri­vals

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Google lost its big­gest reg­u­la­tory bat­tle yet, get­ting a record €2.4 bil­lion (Dh9.86bn) fine from Euro­pean Union en­forcers who say the search-en­gine giant skewed re­sults to thwart smaller shop­ping search ser­vices.

Al­pha­bet ’s Google has 90 days to “stop its il­le­gal con­duct” and give equal treat­ment to ri­val price-com­par­i­son ser­vices, ac­cord­ing to a bind­ing order from the Euro­pean Com­mis­sion on Tues­day. It is up to Google to choose how it does this and in­form the EU of its plans within 60 days. Fail­ure to com­ply brings a risk of fines of up to 5 per cent of its daily rev­enue. “The more con­sumers click on com­par­i­son shop­ping re­sults, the more money Google makes,” said Mar­grethe Vestager, the EU’s anti-trust chief. “This de­ci­sion re­quires Google to change the way it op­er­ates and to face the con­se­quence of its ac­tions.”

Google shares fell 1.5 per cent in pre-mar­ket trad­ing in New York. They have risen 23 per cent so far this year.

Ms Vestager’s de­ci­sion marks the end of a seven-year in­ves­ti­ga­tion fu­elled by com­plaints from small shop­ping web­sites as well as big­ger names, in­clud­ing News Corp, Axel Springer and Mi­crosoft. Euro­pean politi­cians have called on the EU to sanc­tion Google or even break it up while US crit­ics claim reg­u­la­tors are tar­get­ing suc­cess­ful Amer­i­can firms.

Google’s lawyer Kent Walker said the com­pany re­spect­fully dis­agrees with the EU’s con­clu­sions and will con­sider a court ap­peal, ac­cord­ing to a blog post. “When you shop on­line, you want to find the prod­ucts you’re look­ing for quickly and eas­ily,” Mr Walker said. “Re­sults are use­ful and are a much-im­proved ver­sion of the text-only ads we showed a decade ago.”

Ms Vestager said the case is likely to stay on her desk “for quite some time” as reg­u­la­tors mon­i­tor how Google deals with the order “for a num­ber of years.”

Google has been push­ing its own com­par­i­son-shop­ping ser­vice since 2008, sys­tem­at­i­cally giv­ing it prom­i­nent place­ment when peo­ple search for an item, the EU said. Ri­val com­par­i­son sites usu­ally only ap­pear on page four of search re­sults, ef­fec­tively deny­ing them a mas­sive au­di­ence as the first page at­tracts 95 per cent of all clicks.

“As a re­sult of Google’s il­le­gal prac­tices, traf­fic to Google’s com­par­i­son-shop­ping ser­vice in­creased sig­nif­i­cantly, whilst ri­vals have suf­fered very sub­stan­tial losses of traf­fic on a last­ing ba­sis,” the EU said, cit­ing fig­ures of a 45 per cent in­crease in traf­fic for Google’s ser­vice.

Yes­ter­day’s fines could just be the first in a se­ries of EU anti-trust penal­ties for Google, which is fight­ing on at least two other fronts, in­clud­ing its An­droid mo­bile-phone soft­ware and the AdSense on­line ad­ver­tis­ing ser­vice. The de­ci­sion fol­lows Rus­sia’s US$7.8 mil­lion anti-trust fine and penal­ties from Ital­ian, Ger­man and French pri­vacy author­i­ties. Europe has proved a tough ju­ris­dic­tion for Google, which fell foul of the re­gion’s top court, los­ing a high-pro­file right-to-be-for­got­ten case three years ago.

While the penalty is a record, it will do lit­tle to faze a com­pany whose par­ent has more than $90bn in cash. Of graver con­cern is the way reg­u­la­tors called on Google to change the way it han­dles on­line shop­ping searches, one of its big­gest sources of sales growth and strong­est weapons against ri­vals Face­book and Ama­zon. The EU says that Google doesn’t sub­ject its own ser­vice to its al­go­rithm, which ranks search re­sults on qual­ity and rel­e­vance to the user. It said it gath­ered huge amounts of data, in­clud­ing 5.2 ter­abytes of search re­sults from Google, based on 1.7 bil­lion search queries.

“It would take be 17,000 years to read them all out to you,” Ms Vestager said.

The EU’s al­le­ga­tions strike at the heart of a type of on­line ad­ver­tis­ing known as prod­uct list­ing ads, or PLAs, that is grow­ing at al­most three times the rate of tra­di­tional text-based search ads, ac­cord­ing to dig­i­tal mar­ket­ing firm Merkle. The for­mat lets a mar­keter place an ad for an item with large im­ages and price in­for­ma­tion in the prime dig­i­tal real es­tate at the top of search re­sults. Ms Vestager does not fear big num­bers when try­ing to con­vince com­pa­nies to step back in line.

She has or­dered Ap­ple to re­pay some €13bn in tax ad­van­tages and hit truck mak­ers with a record fine of nearly €3bn. The Google fine tops a €1.06bn penalty eight years ago for In­tel, which is still wait­ing for the fi­nal out­come of a court ap­peal.

Francois Lenoir / Reuters

Google was ac­cused of skew­ing search re­sults in its own favour to boost its shop­ping search ser­vice.

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