Google could face $1.2B antitrust fine
EU expected to issue penalty for breaking competition rules
European Union officials are expected to issue a record fine of at least 1.1 billion euros, or $1.2 billion, against Google as soon as Tuesday for breaking the region’s tough competition rules.
Yet the hefty penalty and its timing, which were confirmed by two people with knowledge of the matter who spoke on the condition of anonymity, are likely to be quickly overshadowed by a more complex problem: How should Google comply with the decision to rein in its power?
That dilemma will now take centre stage as the tech giant fights doggedly to protect its crown jewel — its closely guarded search algorithm — from the prying eyes of regulators and, possibly, its competitors.
Potentially heavy-handed intervention may raise the hackles of Google and other companies in the U.S. tech world, which could claim that, once again, Europe is unfairly targeting companies from the United States. The region’s officials deny such accusations.
No matter the final outcome, analysts warn that jockeying for greater regulatory control over Google’s services in Europe will drag on for months, if not years, as the European Commission, the executive arm of the European Union, tries to turn its expected antitrust decision against Google into a reality.
“The issue they’re facing is, how does the European Commission solve the underlying problem” of Google’s suspected antitrust abuse, said Christian Bergqvist, an associate professor of competition law at the University of Copenhagen in Denmark. “It will be very difficult to structure any remedy.”
As part of her decision, which is likely Tuesday but may be delayed, Margrethe Vestager, Europe’s competition chief, is expected to call for Google to change how it ranks some of its search products to give its rivals — a collection of mostly small European and U.S. tech companies — greater prominence when people search online.
How Google responds to these demands will be left to the company, which must provide the region’s authorities with potential technical solutions to counter its perceived antitrust abuse. Officials can ask for more changes if they are not satisfied with Google’s initial proposals.
Experts and some of the company’s competitors claim that any changes would most likely require greater oversight of Google’s products, including a potential independent monitor over its search services (and, potentially, its algorithms) in Europe to guarantee that it continues to comply with the antitrust ruling.
A spokesperson for the European Commission declined to comment on the potential announcement.
Google, which has repeatedly said that it has not done anything illegal, said that it continued to work with the region’s authorities on the antitrust investigation, which began in 2010. “We believe strongly that our innovations in online shopping have been good for shoppers, retailers and competition,” Al Verney, a company spokesperson, said in a statement. The coming announcement against Google represents a watershed moment for the search giant, which holds more than 90 per cent of the market in online search across Europe. Still, the potential fine represents a mere fraction of the company’s $90.3 billion in revenue in 2016.
Vestager first charged the company in 2015 with unfairly diverting online traffic from competitors to favour its own comparison shopping site. That investigation was followed a year later by similar European antitrust charges against Android, Google’s popular mobile software, and, in July 2016, accusations that Google illegally promoted some of its advertising services over those of others. The company denies all of the charges.
Other U.S. tech companies, including Apple, Facebook and Amazon, also remain under investigation by European officials for a variety of antitrust, tax and privacy reasons. And while the companies deny any wrongdoing, the continued focus, and potential hefty fines, have given European authorities an increasingly large say over how much of the Internet is regulated. That position comes despite European tech companies mostly failing to keep pace with their U.S. counterparts.
“Europe has been more aggressive in enforcement of monopolies than the U.S.,” said Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium. “In Europe, we’re more threatened by the dominance of big companies.”