Google hit with record fine over EU rules

Penalty: Internet giant broke competition law

Google has been slapped with a record fine of £2.1billion after its online shopping service broke EU competition rules.

The European Commission (EC) told the search giant it has 90 days to stop the practice or face a penalty of up to 5% of the average daily turnover of the firm’s parent, Alphabet.

Google said it was considering launching an appeal once it had reviewed the decision. The penalty comes after the EC launched a probe into Google Shopping seven years ago, amid complaints it gave the service a prominent position on its search engine and demoted rivals.

Competition commissioner Margrethe Vestager said: “Google has come up with many innovative products and services that have made a difference to our lives.

“That’s a good thing. 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.”

The EC said Google was the most dominant search engine across the 31 countries in the European Economic Area (EEA).

It said the company gave its comparison shopping service an illegal advantage in 13 EEA countries, including the UK and Germany. The abuse caused internet traffic to Google’s shopping service to jump 45-fold in the UK and by 35 and 19 times in Germany and France respectively.

Rival comparison websites suffered sharp reductions, with some UK sites seeing visitor numbers plunge 85%. Ms Vestager said: “What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate.

“And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

The fine handed to Google is significantly bigger than the previous record penalty of £937million dished out to US microchip firm Intel in 2009.

California-based Google said: “We respectfully disagree with the conclusions. “We will review the commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

It launched its comparison shopping service as Froogle in 2004, before changing the name to Google Product Search in 2008 and later Google Shopping in 2013. Despite Google’s search engine dominance, the shopping service initially struggled to make headway against established players.

The EC investigation revealed Google’s own doubts about the comparison platform, with internal e-mails from the tech giant in 2006 saying the service “simply doesn’t work”.

But the firm changed tack in 2008 and began displaying the comparison shopping service at the top of search results, according to the EC.

Google’s algorithms also knocked its competitors further down the search results, with the most highly ranked rival sitting on page four, the commission said.

The EC is also investigating whether Google tried to squeeze out its rivals in online search advertising and through its Android mobile operating system.