Google slapped with $2.7 billion fine
The European Commission has hit Google with a record $2.7 billion fine after concluding that the search giant unfairly favored its comparison-shopping service over others.
“[Google] denied other companies the chance to compete on the merits and to innovate,” said Margrethe Vestager, the European Union commissioner in charge of competition policy, in a news release Tuesday. “And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”
Europe in 2015 formally charged Google with abusing its dominance in search by giving advantage to its own comparison-shopping service. At the time, the EU also opened a separate investigation into whether Google has taken advantage of its dominance in mobile operating systems with Android. In addition, the Silicon Valley tech giant faces an inquiry into its advertising practices in Europe.
Google disagrees with the EU’s decision and says it’s considering an appeal.
“When the Commission asks why some comparison websites have not done as well as others, we think it should consider the many sites that have grown in this period — including platforms like Amazon and eBay,” Kent Walker, Google’s general counsel, said in a blog post Tuesday.
The EU is calling on Google to “end the conduct” within 90 days or risk “penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, Google’s parent company,” the commission says.
The $2.7 billion fine is less than what the company had faced: up to 10 percent of its annual global revenue, which last year totaled nearly $89.5 billion.
Specifically, the EU says Google’s comparison-shopping offering appears “at or near the top” of its own search results. European regulators say they have seen evidence that Google has demoted other comparison-shopping services, and “that even the most highly ranked rival service appears on average only on page four of Google’s search results.”
The fine is “merely a financial inconvenience for Alphabet,” said Richard Windsor, analyst at Edison Investment Research, in a statement. “Hence, we think that the real issue here is the remedies that the EU may enforce on the way that Google does business in the EU.”
A tech trade group to which Google belongs slammed the decision, citing the success of other comparison-shopping services such as Zalando, Asos and Trivago.
“We fail to see the evidence for consumer harm and for quality-related product degradation,” said Jakob Kucharczyk, Europe director for the Computer & Communications Industry Association, in a statement. “If the result of this investigation is to force Google to undo more than
10 years of search engine evolution, EU competition enforcement would clearly not live up to its promise of spurring innovation.”
Meanwhile, rivals of Google have cheered on the European regulators against Google. Oracle, Yelp and others reportedly sent Vestager a letter this week saying they “have watched Google undermine competition in the United States and abroad.” Along with News Corp. and Getty, which have also tussled with Google, the companies said they hoped the United Sates would “use this as an opportunity to address similar anticompetitive conduct by Google.”
In 2013, Google reached a settlement with the U.S. Federal Trade Commission, ducking an antitrust lawsuit over whether it favors its own services in search rankings. But there has been speculation recently that the FTC again has Google in its sights.
The 2.4 billion euro fine handed down Tuesday is the largest of its kind — Intel was fined $1.2 billion by the EU in 2010 and is appealing that decision. Also, the EU decided last year that Apple should repay Ireland $14.5 billion in back taxes, saying that the country gave the company illegal tax benefits. Apple and Ireland are appealing that order. Contact Levi Sumagaysay at 408-859-5293.