Google fined record $2.7 billion by EU

Ruling opposes online shopping process used by giant search engine.

European antitrust officials fined the search giant for unfairly favoring some of its own services over those of rivals.

Google suffered a major blow on Tuesday after European antitrust officials fined the search giant a record $2.7 billion for unfairly favoring some of its own services over those of rivals.

The penalty highlights the aggressive stance that European officials have taken in regulating many of the world’s largest technology companies, going significantly further than their American counterparts.

By levying the fine against Google — more than double the previous largest penalty in this type of antitrust case — Margrethe Vestager, the European Union’s antitrust chief, also laid claim to being the Western world’s most active regulator of digital services, an industry still dominated by Silicon Valley.

“In Europe, companies must compete on the merits regardless if they are European or not,” she said on Tuesday. “What Google has done is illegal under E.U. antitrust rules.”

The apparent focus on Silicon Valley has prompted accusations from some in the United States that the European Union is unfairly targeting American companies. Officials in the bloc vigorously deny those claims.

Still, in recent years, Vestager has demanded that Apple repay $14.5 billion in back taxes in Ireland, opened an investigation into Amazon’s tax practices in Europe and raised concerns about Facebook’s gathering and handling of data. The companies deny any wrongdoing.

In targeting the activities of these digital giants, experts say, European authorities are laying down a marker for more hands-on control of how the digital world

operates. And while the $2.7 billion fine announced on Tuesday is tiny compared with Google’s $90 billion in annual revenue, it highlights the region’s willingness to dole out sizable penalties.

While the fine will garner attention, the focus will most likely shift quickly to the changes that Google will have to make to comply with the antitrust decision, potentially leaving it vulnerable to regular monitoring of its closely guarded search algorithm.

Europe’s latest efforts to rein in technology companies stem from continuing unease that Silicon Valley has come to dominate how the continent’s 500 million citizens interact online.

“Europe is setting the agenda,” said Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium. “It’s always been like that.”

In her statement on Tuesday, Vestager said that Google held a dominant position in online search, requiring the company to take extra measures to ensure that its digital services did not crowd out those of rivals.

The antitrust decision related to Google’s online shopping service, which the European Commission, the executive arm of the European Union, said had received preferential treatment compared with those of rivals in specialized search results.

Analysts say such so-called vertical search products — also including those for restaurant and business reviews — represent a fast-growing percentage of Google’s annual revenue. The company does not break out earnings figures for this unit in its financial reports. The search company is facing two separate antitrust charges in Europe related to Android, its popular mobile software, and to some of its advertising products. Google denies the accusations. Google rebuffed the European Union’s claims on Tuesday, saying that its services had helped the region’s digital economy grow. It has also said that significant online competition remains in Europe, including from companies like Amazon and eBay.

“We respectfully disagree with the conclusions announced today,” Kent Walker, the company’s general counsel, said in a statement. “We will review the commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

Despite Google’s denials, the record fine — the pre- vious high, against Intel in 2009, was €1.06 billion — represents a bloody nose for a company that holds a market share of more than 90 percent in online search in Europe. Several other antitrust complaints related to other specialized search results have been filed in Europe against Google, and Ms. Vestager said Tuesday’s announcement could “be used as a framework” in those investigations.

That may eventually lead to further fines if European authorities find wrongdoing. The complaints include many from other American technology companies, including Oracle, News Corporation and Yelp, which have been vocal advocates of large fines against Google. Google has 90 days to respond to the European Commission’s demands, or face penalties of up to 5 percent of the average daily global revenue of Alphabet, its parent company.