EU hits Google with big fine
EU official Margrethe Vestager says it became clear that Google needed to be reined in.
BRUSSELS — European regulators fined Google a record $2.7 billion for abusing its dominance of the online search market in a case that could be just the opening salvo in Europe’s attempt to curb the company’s clout on that continent.
The decision announced Tuesday by the European Commission punished Google for unfairly favoring its own online shopping recommendations in its search results. The commission also is conducting at least two other probes into the company’s business practices that could force Google to make even more changes in the way it bundles services on mobile devices and sells digital advertising.
Even so, Europe’s crackdown is unlikely to affect Google’s products in the U.S. or elsewhere. But it could provide an opportunity to contrast how consumers fare when the company operates under constraints compared with an unfettered Google.
Move triggers questions
The fine immediately triggered debate about whether European regulators were taking prudent steps to preserve competition or overstepping their bounds to save companies being shunned by consumers who have overwhelmingly embraced an alternative.
Margrethe Vestager, Europe’s top antitrust regulator, said her agency’s nearly seven-year investigation left no doubt something had to be done to rein in Google.
“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,” Vestager told reporters Tuesday.
The fine was the highest imposed in Europe for anti-competitive behavior, exceeding a $1.2 billion penalty on Silicon Valley chip maker Intel in 2009.
The penalty itself is unlikely to leave a dent in Google’s finances. Parent company Alphabet has more than $92 billion in cash, including nearly $56 billion in accounts outside the U.S.
The findings in Europe contrasted sharply with those reached by the U.S. Federal Trade Commission in a similar investigation of Google completed in 2013. The FTC absolved Google of any serious wrongdoing after concluding that its search recommendations did not undermine competition or hurt consumers.
Leading up to that unanimous decision, though, some of the FTC’s staff sent a memo to the agency’s commissioners recommending legal action because Google’s “conduct has resulted — and will result — in real harm to consumers and to innovation in the online search and advertising markets,” according to a memo inadvertently released to The Wall Street Journal two years ago.
No decision on appeal
Google’s misbehavior in Europe boiled down to its practice of highlighting its online shopping service above those of its rivals.
Europe’s investigation did not present any concrete evidence that consumers had been financially damaged by Google’s online shopping tactics, said Pablo Ibanez Colomo, a law professor at the London School of Economics.
“The only harm being alleged here is that competing services have suffered a decrease in traffic coming from Google,” Colomo said.
Alphabet is mulling an appeal of Tuesday’s penalty, but even if that is filed, the Mountain View, Calif., company will have only 90 days to comply with an order to stop favoring its own links to online shopping. If it does not, Alphabet faces more fines of up to 5 percent of its average daily revenue worldwide. That would translate into roughly $14 million, based on Alphabet’s revenue during the first three months of the year.
Rather than comply, Google could shut down its shopping service in Europe.