EU slaps Google with record $2.7B antitrust fine for skewing search results

EU slaps Google with record $2.7B antitrust fine for skewing search results
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The European Union on Tuesday fined Google a record $2.7 billion for abusing its dominant position as a search engine to advance its own products.

The European Commission, the executive arm of the EU, said that Google gave itself an illegal advantage by boosting its own comparison shopping service on its website at the expense of its competitors' products.

“Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals,” said Margrethe Vestager, the EU’s commissioner of competition. “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.”

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Google says that it disagrees with the commission’s findings and will consider making an appeal as it reviews the findings.

The commission took issue with Google placing its shopping comparison results at the very top of its search results, above other competitors. According to the commission's findings, Google “systematically” gave “prominent placement to its own comparison shopping service,” and it “demoted rival comparison shopping services in its search results.”

The commission gave Google 90 days to stop its current shopping comparison practices “or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, Google’s parent company."

The company will now have to give “equal treatment” to its competitors, by showing rival comparison shopping sites in the same position and display as its own service.

Google defended its comparison shopping service product in a blog post issued shortly after the EU announced its decision. The search giant said that its product was mutually “useful” for “connecting our users with thousands of advertisers, large and small.”

“We believe the European Commission’s online shopping decision underestimates the value of those kinds of fast and easy connections,” Kent Walker, Google’s senior vice president and general counsel wrote. “Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay."

The fine is the largest ever imposed by the EU in an antitrust case. The commission fined Intel $1.2 billion in 2009, the largest antitrust fine at the time, over antitrust matters related to AMD, another computer chipmaker.

Intel is still debating an appeal with the EU.

If Google decides to appeal the fine announced Tuesday, it's possible that that the search firm would face a similarly lengthy battle over the results.

The commission launched its probe on Google’s shopping comparison services in 2010. Two years later, EU regulators told Google to make changes that would end the investigation and allow Google to avoid a fine. Regulators dropped this option in 2014.

Google has pushed back against allegations that it has engaged in anticompetitive and antitrust behavior every step of the way.

In a post from November rejecting the EU’s charges, Google argued that Amazon offered similar comparison tools that were not being scrutinized in the same way as its own and that the commission’s claims lacked evidence.

“There is simply no meaningful correlation between the evolution of our search services and the performance of price comparison sites,” Kent Walker wrote at the time.

American politicians and lawmakers, including former Treasury Secretary Jack LewJacob (Jack) Joseph LewHogan urges Mnuchin to reconsider delay of Harriet Tubman bill Mnuchin says new Harriet Tubman bill delayed until 2028 Overnight Finance: US reaches deal with ZTE | Lawmakers look to block it | Trump blasts Macron, Trudeau ahead of G-7 | Mexico files WTO complaint MORE, have hammered the commission for unfairly targeting U.S. businesses. In 2016, the commission ruled that Apple had to pay a hefty $14.5 billion fine for illegal tax arrangements it had with Ireland. The commission has also recently investigated U.S. companies such as Amazon, Facebook and Starbucks.

EU politicians, on the other hand, have called for harsh penalties against Google, arguing that it should be sanctioned or even broken up.

Despite solidarity from some American government officials, some U.S. businesses used the case as an opportunity to get an upper hand on Google. Microsoft, which had been hit with its own heavy anti-competitive fine by the commission in 2007, filed a complaint against Google to the commission, along with News Corp., Yelp and Oracle.

The company faces two other anticompetitive investigations from the commission in regard to its Android mobile operating system and AdSense product. Russia has already fined Google $7.2 billion for anti-competitive matters regarding Android.  

— This report was updated at 8:24 a.m.