EU hands Google record €2.4bn fine
Online shopping service artificially promoted at expense of rival sites
The European commission has handed Google a record-breaking €2.42bn ($2.75bn) fine for abusing its dominance of the search market in building its online shopping service, in a decision that has far-reaching implications for the company.
By artificially promoting its own price comparison service in searches, Google denied consumers real choice and rival firms the ability to compete on a level playing field, European regulators said. The Silicon Valley giant was given 90 days to stop its illegal activities and explain how it will reform its ways or face fines of up to €10.6m a day, which equates to 5% of the average daily worldwide turnover of its parent company Alphabet.
On the back of the finding that Google is the dominant player in the European search engine market, the EU regulator is further investigating how else the company may have abused its position, specifically in its provision of maps, images and information on local services.
The commission’s decision, following a seven-year inquiry into Google’s dominance in search and smartphones, suggests the company may need to fundamentally rethink the way it operates. It is also now liable to face civil actions for damages by any person or business affected by its anti-competitive behaviour.
As the EU official in charge of competition policy, Margrethe Vestager, spelled out the case against Google, she denied accusations that Brussels had a bias against US firms, claiming the tech giant had been guilty of an “old school” form of illegality.
“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing,” Vestager said, as she announced the fine, the largest ever made in an antitrust case. “But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals.
“Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.”
Google rejected the commission’s findings, and signalled its intention to appeal. A spokesman said: “When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both. We respectfully disagree with the conclusions announced today. We will review the commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”
Vestager said Google had entered the shopping comparison market in 2004 with a service called Froogle which allowed its users to compare products and prices online. Within two years the company knew it was struggling, she said. From 2008, Google began to implement, initially in the UK and Germany, and then farther afield, a fundamental change in strategy. According to an analysis of around 1.7bn search queries, Google’s search algorithm was consistently giving prominent placement to its own comparison shopping service to the detriment of rival services.
Vestager … denied anti-Google bias