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- Feb 5, 2017
This morning Google has become a new record holder in the European Union; unfortunately however it’s not a good record to hold.
Capping off a multi-year investigation, the European Commission – the EU’s executive body – has ruled that Google has violated the EU’s antitrust laws with the company’s shopping service and how it is promoted. As a consequence of this ruling, the EU is levying a €2,424,495,000 (~$2.73B) fine against Google, along with requiring the company to cease anti-competitive activities in the next 90 days under threat of further fines. This fine is, in turn, now the largest antitrust fine ever levied by the EU, easily surpassing Intel’s €1.06bil fine in 2009.
The EU has been investigating Google for several years now – and indeed hasn’t been the only body to do so over the years – and based on how the investigation was proceeding, it has been expected for some time now that the European Commission would rule against Google. Overall, the Commission bases the size of the fine on the revenue of the offending business – in this case Google’s shopping comparison service – where it can levy a fine at up to 30% of revenue over the offending period of time. So while Google’s fine is quite large, it also represents an equally significant amount of time – over 9 years in the case of Germany and the UK.
From an antitrust standpoint, the crux of the Commission’s argument has been that Google has leveraged their dominance of the search market to unfairly prop up and benefit their search comparison service. Specifically, that in their search results Google listed their own shopping service and its results ahead of competing services, severely harming competitors, who saw traffic drops of up to 92% depending on the specific country in question.
For the time being, Google has 90 days to fix the issue. The Commission isn’t recommending a specific remedy, but they expect Google to pick a reasonable remedy and to explain it to the Commission. Ultimately what regulations are looking for is that Google give competitors “equal treatment” – that is, that competing shopping comparison services receive equal footing in Google’s search results, following the same methods and processes that Google uses to place their own service. Should Google not comply, then the Commission has the option of levying a further fine of 5% of all of Alphabet’s global daily turnover.
Meanwhile Google has the option of appealing the ruling to the courts, and while they’ve yet to make a decision, they’ve already published their own rebuttal to the Commission’s ruling, indicating that an appeal is likely. In their rebuttal, Google has stated that “While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches.” The company has also noted that they do have competition, particularly from companies like eBay and Amazon.
Finally, along with today’s ruling, the European Commission has also noted that they still have other, ongoing cases against Google that they are continuing to investigate. These include issues over the Android operating system – where the Commission is concerned that “Google has stifled choice and innovation in a range of mobile apps and services by pursuing an overall strategy on mobile devices to protect and expand its dominant position in general internet search” – and Google’s AdSense unit, where there are concerns over Google’s policies have reduced choice in the ad market. As a result, even if Google doesn’t appeal today’s fine, their legal wrangling with the EU is not yet over.