For competition abuses related to its shopping business, Google has been hit with a record 2.4 billion euro ($2.7 billion) fine.
On the basis that Google manipulated its market dominance to the disadvantage of smaller competitors and European consumers, the technology giant should face its largest-ever charge for a monopoly abuse case, EU antitrust regulators ruled on Tuesday.
In order to give priority to its European comparison shopping service – initially ‘Froogle’ and later ‘Google Shopping’ – ahead of other rival shopping businesses, Google had been altering its search engine results since 2008, The European Commission found.
More clicks and revenue was generated as Google was able to significantly increase the amount of traffic to the previously ailing service by ranking Google Shopping service ahead of other competitors. Meanwhile, other companies saw traffic levels drop as they were bumped down the list.
Google had breached EU rules put in place to protect markets and shoppers, the European Commission ruled even though businesses have the right to build on their popularity.
“What Google has done is illegal under EU antitrust rules,” Margrethe Vestager, the European Union’s Competition Commissioner told a press conference.
“It has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice, and innovation.”
Following a number of complaints from rivals in both the U.S. and Europe, regulators were initially alerted to the possible malpractices.
Regulators discovered that Google “systematically gave prominent placement only to its own product” and also “demoted other rival services” during a seven-year investigation after the allegations were received.
The fine reflects the “serious and sustained” nature of Google’s violation of EU antitrust rules, Vestager outlined.
Such fines for antitrust abuses are capped at up to 10 percent of the company’s global turnover, EU regulatory guidelines stipulate. Based on parent company Alphabet’s 2016 turnover, Google’s fine could have been as much as $9 billion by that measure.
Indicating its intention to make an example of the company, it is well above those previously doled out by the regulator, even though it fell short of this mark.
In order to make the necessary changes to create equal opportunity for all competitors or it could face further fines, it has also been given 90 days.
Google said it will consider appealing to the European Court of Justice to overturn the fine and that it “respectfully disagrees” with the allegations.
According to legal associate Oliver Fairhurst of law firm Lewis Silkin, such an appeal could well drag into 2020.
“Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both,” Kent Walker, Google’s senior vice president and general counsel wrote in a blog post shortly after the announcement.
“We believe the European Commission’s online shopping decision underestimates the value of those kinds of fast and easy connections.”
it is currently under two further investigations by the European Commission meaning that Google’s battle with the regulators is unlikely to end soon, even though it is not yet clear what success Google will have appealing the case.
(Adapted from CNBC)