Get a demo Do I subscribe? News sign-up
Print

Europe slaps Google with multi-billion fine

News, 28 June 2017
Topics

BRUSSELS: European Union regulators have imposed a €2.42bn fine on Google after ruling that the US internet giant had abused its market power by favouring its own shopping comparison service in search results.

The European Commission (EC) said in a statement that Google's "illegal practices" have had a significant impact on competition and allowed its Google Shopping service to make significant gains in traffic at the expense of its rivals and to the detriment of European consumers.

Google was also accused of demoting rival comparison shopping services in its search results, a practice which in effect helped it to dominate the general internet search market in 30 out of 31 European Economic Area countries – the Czech Republic being the one exception.

"Market dominance is, as such, not illegal under EU antitrust rules," the EC said. "However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets."

In addition to the record €2.42bn fine, Google has been told that it must end its anti-competitive practices within 90 days or face further penalties of up to 5% of the average daily worldwide turnover of its parent company, Alphabet.

Commissioner Margrethe Vestager, the EU's head of competition policy, said Google has come up with many innovative products and services, but its strategy for its comparison shopping service was not just about making its product better.

"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," she said.

"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, which said it may appeal the ruling, was also charged with abusing its dominant position in two other cases, which are still being investigated.

The EC has come to a "preliminary conclusion" that Google has used its Android mobile operating system to stifle choice and innovation in a range of mobile apps and services.

Second, the EC expressed concern about whether Google's AdSense service reduced choice by preventing third-party websites from sourcing search ads from the company's competitors.

Commenting on the wider implications of the decision, the BBC's technology correspondent, Rory Cellan-Jones, said: "This is a big moment in a clash between the EU and the US's tech giants, which has been going on for more than a decade.

"The commission believes it has struck a blow for consumers and for little firms at a time when online advertising – particularly on mobile phones – is dominated by Google and Facebook.

"Google believes the regulator has a weak case and has failed to provide evidence that either consumers or rivals have been harmed.

"In essence, it sees this as a political move rather than one based on competition law. You can be pretty confident that the Trump administration will share that view."

Data sourced from European Commission, BBC; additional content by WARC staff

Topics