Google fined £2.1BN for online shopping competition breaches
Jun 28 2017
After a seven-year legal battle, European authorities came down hard on Google on Tuesday for taking advantage of its dominance in online searches to direct customers to its own businesses, fining the tech giant a record 2.42 billion euros ($2.72 billion) and raising the prospect of more.
Regulators said that Google must change its behavior within 90 days or face additional penalties. That's a good thing. The probe includes whether the search results favor Google's services, such as its price comparison business, how it displays the contents of rivals, and how it manages ads.
It said Google's search engine had systematically given prominence to its own comparison shopping service, so that it was displayed at or near the top of search results.
Vestager added: "What Google has done is illegal under European Union antitrust rules. It denied other companies the chance to compete on the merits and to innovate", Vestager said in a statement.
It said it would review the decision and consider an appeal.
In response to the commission's decision, Google said: "When you shop online, you want to find the products you're looking for quickly and easily".
The EU's allegations strike at the heart of a type of online advertising known as Product Listing Ads, or PLAs, that is growing at nearly three times the rate of traditional text-based search ads, according to digital marketing firm Merkle Inc.
Google said it "respectfully disagrees" and is considering appealing the fine.
Despite Google's dominance, the service had initially struggled to make headway against the established players within the market.
The European Commission was prompted to take action after numerous complaints were made by rival firms such as Yelp, TripAdvisor, UK comparison site Foundem, and News Corp.
Facebook was fined by antitrust regulators in May for misleading officials over its takeover of messaging service WhatsApp.
It added that Google's algorithms also knocked its competitors further down the search results, with the most highly ranked rival sitting on page four. It also opens a preliminary investigation into whether Google uses its Android mobile operating system to rig the market for apps.
But it could affect Google's way of doing business in the longer-term.
"There can't have been many competition cases where the stakes for consumers, businesses, and innovation were any higher".
Companies that pay for the tech giant's G Suite of products, including Gmail, Calendar, Docs and Sheets, have never had their messages scanned for advertising purposes, and Google said its free email package will now follow suit. "Left unchecked, there are few limits to this gatekeeper power".
Europe's willingness to go after tech companies with investigations into competitive practices is particularly stark as USA regulators have remained quiet on these issues-a topic that is becoming the source of growing critique. A company should not be allowed to abuse a dominant position in one area to become dominant in another area.