Google has been hit with a record-breaking €2.42 billion ($2.7 billion) fine by the European Union for breaking antitrust law. The decision follows a seven-year investigation into the US company’s search algorithms, which ended with the judgement that Google had “abused its dominant position by systematically favoring” its own shopping comparison service. Today’s fine is the largest antitrust judgement handed out by the executive body of the EU, the European Commission, topping a €1 billion penalty given to Intel in 2009.
“What Google has done is illegal.”
The primary target of the case is Google Shopping, a price-comparison feature built into the company’s search engine. The commission’s antitrust filing states that Google showed users results from Google Shopping “irrespective of [their] merits,” depriving rival price comparison sites of traffic. The EU argues that because Google is so overwhelmingly dominant in Europe, it should not be allowed to actively undermine competitors.
As part of today’s decision, Google will have to change how its search algorithm ranks websites, in order to “comply with the simple principle of giving equal treatment to rival comparison shopping services and its own service.” This is a major imposition that Google will not take lightly. If it does not end its current conduct, the EU says the company faces daily penalties of up to 5 percent of its average daily turnover.
In a press statement, EU competition commissioner Margrethe Vestager praised Google for coming up with “many innovative products and services that have made a difference to our lives.” But added that the company also “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,” said Vestager. “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."
Google may appeal this decision in EU courts, potentially delaying a final resolution for years. In a statement the company said: “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.”
The US company currently faces two other ongoing EU antitrust investigations: one targeting its AdSense business, and another, the deals it makes with Android phone manufacturers. The EU has the power to fine Google up to 10 percent of its annual revenue (around $9 billion) in each investigation. Today’s judgement also opens up the possibility of other companies to take civil action suits against Google.
Today’s decision will anger the US business world, which has accused the EU of unfair treatment against American tech companies. Vestager recently came under fire for a decision last year forcing Apple to pay Ireland €13 billion in back taxes. The EU denies it is biased against the US, and there’s data to support this. Examining past antitrust decisions made by the commission between 2010 and 2017, 15 percent have hit US companies, while nearly two-thirds have targeted European firms.