Google Slapped with $2.7B Fine for EU Antitrust Violation
Jun 28 2017
Crucially for Google, Brussels has demanded that the USA tech giant change the business model for Google Shopping to meet the EU's concerns.
Google insisted that it "shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both".
This is the largest antitrust fine handed out by the European Commission to date, even beating out the €1.06 billion fine given to Intel, which is now going through a long appeals process.
If the ruling stands, it could reshape the company's behavior in one of its most lucrative markets. "And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation", European Competition Commissioner Margrethe Vestagersaid in a statement.
The fine centers around Google's comparison shopping service - which has been known by names from Froogle and Google Product Search to Google Shopping - and its prominent display in related search results.
Reverting to relegating the feature to its own separate page would also seem like it could satisfy the commission's requirements, but that seems like a more extreme move than Google would be willing to make, because it would basically bury the shopping tool itself.
"Although the record-breaking 2.42bn euro fine is likely to dominate the headlines, the prohibition of Google's immensely harmful search manipulation practices is far more important", said its chief executive Shivaun Raff.
Google has come up with many innovative products and services that have made a difference to our lives. It has denied other companies the chance to compete on the merits and to innovate.
Google senior vice president and general counsel Kent Walker said in a blog post that the company is considering appealing the decision.
The penalty payment for failure to comply would amount to around 12 million dollars a day based on Alphabet's 2016 turnover of 90.3 billion dollars.
"We respectfully disagree with the conclusions announced today".
"We will monitor Google's compliance closely", Vestager said.
The biggest risk to Google is not the fine but the changes demanded to its business, said Richard Windsor, an independent financial analyst who tracks competition among the biggest U.S. and Asian internet and mobile companies. It is investigating whether Google abused its ownership of the Android operating system to harm designers of apps that rival its own, and it's also accusing Google of stopping competition in search ads.
The commission says that Google's rivals saw their traffic plummet - by 85 percent in the United Kingdom, 92 percent in Germany and 80 percent in France.
"Right now, the way that Google prioritises some of its retail and commercial services generates quite a lot of ad income".
European regulators said "Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service".
"If it has to change the appearance of it results and rankings, that's going to have an impact on how it can monetise search", said Chris Green, from the tech consultancy Lewis.
"U.S. lawmakers and regulatory authorities, by contrast, have been "asleep at the switch" for far too long". The European Commission continues to pursue two separate cases against Google.