Google has been hit with a record-breaking $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. This fine on Google is the largest antitrust judgement handed out by the executive body of the EU, the European Commission, and beats a 1 billion Euros penalty given to Intel in 2009. European Commission’s press release says, “The European Commission has fined Google €2.42 billion for breaching EU antitrust rules. Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.”
This decision has been years in the making, with the European Commission first sending a letter to Google about the matter in 2015. EU competition commissioner Margrethe Vestager said that they studied 1.2 billion search inquiries before they reached their decision that Google was unfairly manipulating results. She said that there were many exchanges with Google to hear their views. Additionally, there were many exchanges with customers and competitors, and some of them, some US companies, were involved as complainants, the Commission claimed. Meanwhile, Google has pushed back in a statement, insisting that the company is simply providing the best service possible to its search engine customers.
Here is a 10 point explanation about the case:
1. Two things which Google has been accused of:
a) Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google’s comparison shopping service wants to show results, these are displayed at or near the top of the search results.
b) Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google’s search results on the basis of Google’s generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted.
2. The key target in the case is Google Shopping. It is a price comparison feature built into the Google search engine. The EU’s antitrust filing states that Google showed users results from Google Shopping “irrespective of merits,” which deprived rival price comparison sites of traffic.
3. Apart from the fine, Google will also have to change how its search algorithm ranks websites “to comply with the simple principle of giving equal treatment to rival comparison shopping services and its own service.” EU says that if the current conduct is not altered, Google will face daily penalties of up to five percent of its average daily turnover.
4. In a press statement, 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.”
5. Meanwhile, Google may appeal this decision in in EU courts. This could potentially delay a final resolution for years, according to various experts. 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.”
6. Google, which makes most of its money from advertising, has argued that the European Commission’s theory “just doesn’t fit the reality of how most people shop online.”
7. Google also faces two other ongoing EU antitrust investigations: one targeting its AdSense business, and another, the deals it makes with Android phone manufacturers.
8. This decision can potentially anger the US business world, which has usually accused the EU of unfair treatment against American tech companies. Even Vestager has previously come under fire for a 2016 decision forcing Apple to pay Ireland €13 billion in back taxes. The EU reportedly denies such claims.
9. According to a graphic in the EU report, Google is supremely dominant in Europe as a search engine. Check the picture here:
10. Earlier Kent Walker, Google’s general counsel, had said in a blog post, “They reach merchant websites in many different ways: via general search engines, specialist search services, merchant platforms, social media sites, and online ads served by various companies.”