European Union case poses problems for Google
EU lashes out at Google for allegedly manipulating search results to favour its own services
A ban on manipulating search results could have a bigger impact than the €2 billion fine.
hit with a fine of more than $2 billion over allegations that it manipulated search results to favour its own services over other sites.
The fine, which was announced just as this magazine went to print, was much larger than expected and comfortably exceeds the €1 billion meted out to Intel eight years ago for skewing the processor market at the expense of rivals.
Google contested the EU’s ruling. “We respectfully disagree with the conclusions announced today,” the company 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.”
While the fine will hurt, the key impact of the EU’s final ruling could be major changes to Google’s business model that have a far greater impact on the firm’s profits. “Although the anticipated fine is likely to dominate the headlines, the prohibition of Google’s illegal search manipulation practices will be far more important,” said Shivaun Raff, CEO of Foundem, which along with Microsoft and other companies brought the initial complaint to the EU.
“[Currently] Google can deploy its insidious search manipulation practices to commandeer the lion’s share of traffic and revenues in virtually any online sector of its choosing,” claimed Raff, “quietly crushing competition, innovation, and consumer choice in the process.”
The case dates back to 2009, when price comparison site Foundem felt it was treated unfairly in rankings, with Google giving more prominence to results from Google Shopping.
Google has been given only 90 days to put an end to its anti-competitive actions or it could face further punishment from the EU, with fines of up to $14 million per day possible.
“The Google Search case is not just about Google’s comparison shopping service; it is about Google’s core search results and the illegal practices Google uses to manipulate them,” Raff said. “The final remedy is likely to extend beyond comparison shopping to include travel, search, local search, and other existing and future specialised search services.”
No preferential treatment
Google will now be prevented from favouring its own services with a set of rules on how it treats rivals in rankings, and a monitor could be put in place to ensure it complies.
Under a prohibition solution that’s favoured by several industry and consumer groups, Google could be required to submit all services – including its own – to exactly the same crawling, ranking, indexing and penalty algorithms. The company has previously downgraded sites it considered to be low-value.
“If the Commission adopts a prohibition decision, it will not be limited to desktop search,” said Raff. “It will cover all of Google’s search results, regardless of whether they are accessed through a browser or an app, or from a desktop, laptop, tablet, or mobile phone.”
“When you shop online, you want to find the products you’re looking for quickly and easily,” a spokesman for
Google told the BBC. “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.”
Ongoing costs
Google has the right to appeal, which could push a final resolution back significantly. However, once the judgement is finalised, the company could face civil legal action from multiple sources.
Foundem, for example, has a civil case against Google in the UK high courts that has been on hold while the EU reached a decision. If the final ruling goes against Google, the UK courts won’t need to review whether Google was in the wrong, but merely decide on the financial damages.
The initial complaint against Google was filed by 19 companies, who may each seek damages of their own, although Microsoft withdrew from the complaint after reaching a settlement. The complainants derive no income from the fine, which goes directly to the EU’s coffers.
Separately, the EU last year issued Google with a Statement of Objections detailing its view that the company had “abused its dominant position by artificially restricting the possibility of third-party websites to display search advertisements from Google’s competitors”. That case continues.
The EU’s shopping case against Google has taken seven years to reach a conclusion, and leaves the tech giant in the EU hall of shame alongside Intel and Microsoft, both of which have faced multi-billion fines for anticompetitive practices.
The case against Google leaves the tech giant in the EU hall of shame alongside Intel and Microsoft