The European Union slapped a record 2.42 billion-euro ($2.72 billion) fine on internet giant Google on Tuesday for taking advantage of its dominance in online searches to direct customers to its own online shopping business.
European regulators gave the company based in Mountain View, California, 90 days to stop or face more fines of up to 5 percent of the average daily worldwide revenue of parent company Alphabet.
Google says it is considering an appeal.
The European Commission, which polices EU competition rules, alleges Google elevates its shopping service even when other options might have better deals.
The Commission said Google “gave prominent placement in its search results only to its own comparison shopping service, whilst demoting rival services. It stifled competition on the merits in comparison shopping markets.”
“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,” EU Competition Commissioner Margrethe Vestager told reporters.
Google maintains it’s just trying to package its search results in a way that makes it easier for consumers 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,” Kent Walker, senior vice president at Google, said in a statement.
“We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case,” he said.
The fine is the highest ever imposed in Europe for anti-competitive behavior, exceeding a 1.06 billion euros penalty on Silicon Valley chip maker Intel in 2009.
Timeline” Google vs. EU
As the European Union fines Google for abusing its dominance in online searches, here is a look back at the key dates in the bloc’s legal tussle with the technology company.
- November 2010 – The EU opens formal inquiry into whether Google manipulates search results in a way that favors its own business. The probe includes whether the search results favor Google’s services, such as its price comparison business, how it displays the contents of rivals, and how it manages ads.
- April 2013 – Google offers change to its practice in the hope of ending the investigation.
- July-December 2013 – After feedback from complainants, the EU twice rejects Google’s offer to change its search results as not good enough.
- Feb 2014 – The EU and Google reach a tentative agreement on how to fix the search results. This keeps Google from paying a fine.
- May 2014 – In a separate case, the European Court of Justice rules that Google must consider EU citizens’ requests to remove irrelevant or embarrassing personal information that pops up on a search of their names.
- Sept 2014 – After receiving complaints from Google’s competitors, the EU appears to make a U-turn on its settlement with Google on search results, declaring it insufficient.
- April 2015 – After five years of investigations and talks, EU formally charges Google with abusing its dominant position in search results, a step up in the legal battle. It also opens a preliminary investigation into whether Google uses its Android mobile operating system to rig the market for apps.
- April 2016 – The EU charges Google with using Android to gain market advantage in mobile apps.
- June 2017 – The EU fines Google a record 2.42 billion euros ($2.72 billion) for breaching antitrust rules with its online shopping service. It says Google abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
But the penalty is likely to leave a bigger dent in Google’s pride and reputation than its finances. Alphabet has more than $92 billion (82 billion euros) in cash, including nearly $56 billion (50 billion euros) in accounts outside of Europe.
Vestager said the Commission’s probe, which started in 2008, looked at some 1.7 billion search queries. Investigators found that on average even Google Shopping’s most highly-ranked rivals only appeared on page 4 of Google search results. Vestager said that 90 percent of user-clicks are on page one.
“As a result, competitors were much less likely to be clicked on,” she said.
It is up to Google to decide what changes it wants to make to comply with the Commission’s ruling, but any remedy must ensure that rival companies receive the same treatment as Google Shopping.
“We will monitor Google’s compliance closely,” Vestager said.
She noted that that any company or person who has suffered damages due to the company’s practices can make claims to national courts.
More broadly, Vestager said, the probe has established that Google is dominant in general internet search in all 31 countries of the European economic area. This will affect other cases the Commission might build against the internet giant’s various businesses, like Google Images.
She also noted that regulators are making “good progress” in its other Google probes into Android and search advertising, and that the “preliminary conclusion” is that they breach EU anti-trust rules.
The Commission has come under fire in the United States for a perceived bias against U.S. companies.
Vestager said she has examined statistics concerning anti-trust, merger control and state aid decisions and that “I can find no facts to support any kind of bias.”