Google suffered a major regulatory blow on Tuesday, when the EU's antitrust regulator fined Alphabet’s Google a record €2.42 billion ($2.71 billion) fine for "abusing its dominance in search" and favoring its own comparison-shopping service in search results: a decision with far-reaching implications for both the tech sector and already strained transatlantic relations. The EU further ordered the search giant to apply the same methods to rivals as its own when displaying their services in search results.
Margrethe Vestager, the EU’s competition commissioner, said Google “denied other companies the chance to compete” and left consumers without “genuine choice."
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.
Margrethe Vestager, the European Union antitrust chief
By levying the fine - the biggest ever in this type of antitrust case - Vestager laid down a marker as arguably the Western world’s most aggressive regulator of digital services from the likes of Google and Facebook. Previously, Vestager demanded that Apple repay $14.5 billion in back taxes in Ireland, opened an ongoing investigation into Amazon’s tax practices in Europe and raised concerns about Facebook’s alleged dominance over people’s digital data. The companies deny any wrongdoing.
As the FT notes, Google now has 90 days to stop its illegal conduct and “refrain from any measure that has the same or an equivalent object or effect”. “The decision orders Google to comply with the simple principle of giving equal treatment to rival comparison shopping services and its own service."
The Google probe is one of the most complex and politically charged ever undertaken by Brussels. Although the ruling orders Google to cease the anti-competitive practices, the precise changes required are expected to take months or even years to negotiate. Google can be hit with further non-compliance fines.
According to the WSJ, the decision could force broader changes to the way Google designs its search results in Europe because it sets a possible precedent for other search services, such as travel and maps, which the EU is also scrutinizing.
The EU said Google must treat rival comparison shopping services equally in its search results. Google has 90 days to end the conduct or face penalty payments of up to 5% of average daily global revenue, the EU said. Google is tasked with ensuring compliance and should explain how it intends to implement the decision, the EU said.
The decision is the first of three separate advanced investigations by the commission into Google’s practices. The EU is continuing to probe Google over its Android mobile operating system and its Adsense advertising service.
Google responded that it "respectively disagrees" with the EU fine and is considering an appeal. Kent Walker, Google senior vice president and general counsel, said:
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. We respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.
Live feed from Vestager's press conference below: