The European Commission (EC) fined Google $2.7 billion for manipulating search engine results to favor its own services over competitors. The EC states that Google breached European Union (EU) antitrust rules and abused its market dominance as a search engine. Alphabet, Google’s umbrella company, has 90 days to pay the fine or face a 5% penalty, per day.
The EC is currently investigating Google’s Android and AdSense services, and has launched tax avoidance proceedings against giants like Amazon, Apple and Starbucks.
“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. 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. 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,” said, Commissioner Margrethe Vestager, in charge of competition policy.
According to The Verge, the fine is the largest antitrust penalty issued by the EC and could have far-reaching implications for Google’s operations across Europe and the rest of the world.
The EC began its investigation in 2010 following several complaints filed by online shopping services who claimed Google unfairly promoted its services over their own. According to experts, the ruling could pave the way for future cases and land the search engine giant in some serious financial trouble.
Google Faces Anti-Trust Complaints World-Wide
Google is already facing antitrust hearings in South Korea and Brazil, and the latest EC ruling has encouraged countries like the United States, United Kingdom and Australia to conduct their own investigations.
Google has 90 days to fight the EC ruling, and it looks like they won’t go down without a fight. The search engine disputed the decision in a recent blog post, arguing that Google Shopping is more useful for consumers.
“When you use Google to search for products, we try to give you what you’re looking for,” Kent Walker, Google’s chief counsel, said. “Our ability to do that well isn’t favoring ourselves, or any particular site or seller — it’s the result of hard work and constant innovation, based on user feedback.” Walker also said that Google will most likely file an appeal.
The EC said it’s Google’s “sole responsibility” to ensure its search engine practices comply with European regulation and it must “explain how it intends to do so.”
The Verge says Google has options to improve their operations to abide by European laws. Experts say, “Google can adjust its search algorithm, or to prominently display links to competing services alongside its own.” However, experts believe this will lead to a decline in advertising revenue and could have a major long-term effect on their business. Another option is to scrap Google Shopping from Europe altogether. It might sound like a drastic step but that’s exactly what they did to Google News in Spain when ordered to pay news outlets money for publishing content.
Businesses and industry bigwigs across the United States have been extremely critical of European regulations and the way they seem to “unfairly target” American companies. The EC is currently investigating Google’s Android and AdSense services, and has launched tax avoidance proceedings against giants like Amazon, Apple and Starbucks. The US Federal Trade Commission also launched antitrust investigations into Google’s practices in the past but they were dropped in 2013.
Many expect Google to appeal the EC’s latest ruling. If they do, it could be years before the case is settled and could throw up many legal issues for the company in the meantime. Experts say it could open the floodgates for other governments around the world to target the search engine and could lead to civil suits being filed against them.