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The European Union has issued a record $2.7 billion (2.4 billion euro) fine against online giant Google, finding the company guilty of skewing search results by favoring its own shopping search service over competitors’.
The ruling, unveiled Tuesday, could have wide-ranging effects on online commerce in Europe.
Google now has 90 days to stop its activities or face more fines, totaling up to 5 percent of the average daily worldwide revenue of Google parent company Alphabet.
“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing,” said European Commissioner Margrethe Vestager, head of competition policy in the EU, “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.”
She added: “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. 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.”
Google has always denied claims its services limit competition, saying it structures its search results the way it does solely to make it easier for customers to find what they want.
“When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both,” Google said in a reaction. “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.”
Tuesday’s ruling follows a seven-year investigation by the European commission. A fine was expected after the commission last summer repeated its claims that Google had “abused its dominant position (in online search) by systematically favoring its comparison shopping service in its search results pages.”
But the fine was even higher than many had expected, more than double some estimates, and is a clear indication that Europe means to act aggressively against what it sees as online monopolies that violate the EU’s antitrust laws.
Critics have accused the EU of unfairly targeting U.S. companies in its online crackdown, something the region’s officials deny.
The battle over Google’s operations in Europe is far from over. The European Commission, the EU’s executive arm, now has to figure out how to turn Tuesday’s ruling into reality.
A key question for Google will be how to comply with European law while still keeping its search algorithm, the single most valuable part of the tech giant, secret and away from the prying eyes of competitors.
“We applaud the European Commission’s leadership in confronting the discriminatory behavior of Google in the comparison shopping industry,” Rupert Murdoch’s News Corp said in a statement. “Other regulators and companies have been intimidated by Google’s overwhelming might, but the Commission has taken a strong stand and we hope that this is the first step in remedying Google’s shameless abuse of its dominance in search.”
News Corp. added: “We strongly believe that the abuse of algorithms by dominant digital platforms should be of concern to every country and company seeking a fair, competitive and creative society. Google has profited from commodifying content and enabling the proliferation of flawed and fake news, to the detriment of journalism and of an informed society.”
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