Google has been hit with a record-breaking fine of 2.4 billion euros ($2.7 billion, £2.1 billion) by European regulators.
The European Commission accused the California-based technology giant of abusing its dominant position and promoting its own shopping service in its search results over those of its competitors.
The culmination of a multiyear investigation into Google’s business practices going back nearly a decade, it is a mammoth ruling, more than twice as big as the previous largest comparable fine.
It seems likely to further inflame tensions between European regulators and Silicon Valley — and it opens the door to further investigations of Google’s businesses by the European Commission as well as legal action from Google’s competitors in national courts across Europe. The EC has two more unresolved investigations into Google and its Alphabet parent, one into Android’s dominance of the mobile device ecosystem and another on its use of Adsense to allegedly prevent websites using other search ad partners. So, while today’s penalty feels like the spectacular end of a long, behind-the-scenes process, it is actually merely an appetizer — there are two more courses on Vestager’s menu that have yet to be served.
“What Google has done is illegal under EU antitrust rules,” Europe’s competition commissioner, Margrethe Vestager, said in a statement. “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.”
In a statement issued immediately after the ruling, Google said it “respectfully” disagreed and was considering whether to appeal.
An epic, record-breaking fine
The fine is far larger — more than twice as much — as the roughly €1.1 billion (£971 million) that was expected before the announcement. The previous largest monopoly case was a €1.06 billion (£932 million) fine targeting Intel in 2008, Bloomberg reported (3% of its sales at the time).
The case centres on Google’s shopping service. It appears at the top of Google’s search results for relevant searches — above rival price comparison services. The European Commission says the placement means Google is abusing its dominant position in the European search-engine market (where its market share tops 90%) to promote its shopping service at the expense of competitors, harming competition, and breaking the law.
Vestager said: “Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.”
In a press conference on Tuesday, she added that the company was “not allowed to abuse their power in one market to give themselves an advantage in another market … Our investigation has proved Google has done exactly that.”
Google must now change its practices within 90 days or face daily “penalty payments” of up to 5% of the daily worldwide turnover of its parent company, Alphabet, the commission said. (In 2016, Alphabet’s global revenue was $90 billion.)
In a blog post published in response to the ruling, Google’s senior vice president and general counsel, Kent Walker, challenged the finding.
“Our ability to do that well isn’t favoring ourselves, or any particular site or seller — it’s the result of hard work and constant innovation, based on user feedback,” he wrote.”Given the evidence, we respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”
Alternatively, Business Insider’s Jim Edwards has argued that Google’s record-breaking fine and its troubles in Europe are “entirely of its own making.” The fine followed complaints by multiple companies about Google’s practices in displaying its results above links to competitors in search results.
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