- Justin Sullivan
- The European Commission has hit Google with a record-breaking €2.4 billion (£2.1 billion, $2.7 billion) fine in an antitrust case. Google has also been ordered to change its practices to promote the shopping services of its competitors or be fined up to 5% of worldwide daily turnover. It seems likely to further erode the uneasy relationship between much of Silicon Valley and Europe. Europe’s competition commissioner, Margrethe Vestager, hinted it could act as a “precedent” to guide investigations of Google’s other businesses. The ruling also opens the door to further legal action being taken against Google by competitors. Google said it “respectfully” disagreed and was considering whether to appeal.
LONDON – Google has been hit with a record-breaking fine of 2.4 billion euros ($2.7 billion, £2.1 billion) by European regulators.
The European Commission accused the California-based technology giant of abusing its dominant position and promoting its own shopping service in its search results over those of its competitors.
The culmination of a multiyear investigation into Google’s business practices going back nearly a decade, it is a mammoth ruling, more than twice as big as the previous largest comparable fine.
It seems likely to further inflame tensions between European regulators and Silicon Valley – and it opens the door to further investigations of Google’s businesses by the European Commission as well as legal action from Google’s competitors in national courts across Europe. The EC has two more unresolved investigations into Google and its Alphabet parent, one into Android’s dominance of the mobile device ecosystem and another on its use of Adsense to allegedly prevent websites using other search ad partners. So, while today’s penalty feels like the spectacular end of a long, behind-the-scenes process, it is actually merely an appetizer – there are two more courses on Vestager’s menu that have yet to be served.
“What Google has done is illegal under EU antitrust rules,” Europe’s competition commissioner, Margrethe Vestager, said in a statement. “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.”
In a statement issued immediately after the ruling, Google said it “respectfully” disagreed and was considering whether to appeal.
An epic, record-breaking fine
The fine is far larger – more than twice as much – as the roughly €1.1 billion (£971 million) that was expected before the announcement.
The previous largest monopoly case was a €1.06 billion (£932 million) fine targeting Intel in 2008, Bloomberg reported (3% of its sales at the time).
The case centres on Google’s shopping service. It appears at the top of Google’s search results for relevant searches – above rival price comparison services. The European Commission says the placement means Google is abusing its dominant position in the European search-engine market (where its market share tops 90%) to promote its shopping service at the expense of competitors, harming competition, and breaking the law.
Vestager said: “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.”
In a press conference on Tuesday, she added that the company was “not allowed to abuse their power in one market to give themselves an advantage in another market … Our investigation has proved Google has done exactly that.”
- Shona Ghosh/Business Insider
Google must now change its practices within 90 days or face daily “penalty payments” of up to 5% of the daily worldwide turnover of its parent company, Alphabet, the commission said. (In 2016, Alphabet’s global revenue was $90 billion.)
- Look at the evidence: Google’s troubles in Europe are entirely of its own making Why Google just got fined €2.4 billion for Google Shopping Here’s the EU’s full statement on Google’s record-breaking €2.4 billion fine
In a blog post published in response to the ruling, Google’s senior vice president and general counsel, Kent Walker, challenged the finding.
“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,” he wrote.”Given the evidence, 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.”
Alternatively, Business Insider’s Jim Edwards has argued that Google’s record-breaking fine and its troubles in Europe are “entirely of its own making.” The fine followed complaints by multiple companies about Google’s practices in displaying its results above links to competitors in search results.
Google could face further legal action from competitors – and the commission
.@Google gave illegal advantage to own comparison shopping service by abusing its search dominance: It must stop & pay fine of €2,4 bn.
— Margrethe Vestager (@vestager) June 27, 2017
Vestager, the competition commissioner, brought formal charges against Google in 2015, citing Google’s practices as far back as 2008 as examples of “illegal” behaviour. The case sits alongside two other antitrust investigations: one over Android, its mobile operating system, and another relating to its online search advertising business. (These other two remain ongoing.)
Tuesday’s ruling opens the door to legal action against Google by companies who say they are affected by Google’s related business practices. The commission said: “Google is also liable to face civil actions for damages that can be brought before the courts of the member states by any person or business affected by its anticompetitive behaviour. The new EU Antitrust Damages Directive makes it easier for victims of anticompetitive practices to obtain damages.”
Vestager has also hinted that the ruling may be a precursor to further investigations of Google’s other products, from Maps to Images, and whether Google has used its dominant position in the search market to promote them as well.
“We have been looking into this, and today’s decision is a precedent, a precedent that can be used as a framework to analyse the legality of such conduct,” she said. “At the same time, we will have to take care of the characteristics … and of course the facts of the specific case … Today’s decision shows in Europe companies must compete on their merits, regardless of whether they operate online or on the high streets, regardless of whether they are European or not.”
For now, the commission has demanded that Google change how it displays its search results to promote its competitors. It “orders Google to comply with the simple principle of giving equal treatment to rival comparison shopping services and its own service … Google has to apply the same processes and methods to position and display rival comparison shopping services in Google’s search results pages as it gives to its own comparison shopping service.”
Silicon Valley’s relationship with Europe is already uneasy
- Justin Sullivan/Getty Images
The record-breaking fine seems likely to further erode already tense relationships between American tech giants and the European regulators. Last year, Apple was hit with a record €13 billion (£11.3 billion) tax bill after the commission, led by Vestager, ruled its tax arrangements in Ireland amounted to “state aid.” (Both Apple and Ireland challenge this.) This rocky relationship stretches back a decade, with the landmark antitrust case against Microsoft in the 2000s.
That said, some American tech firms support the European Commission’s approach. Yelp, Getty Images, News Corp, and other companies signed a letter to Vestager in support on Monday, Politico reported. “As U.S.-based companies, we wish to go on record that enforcement action against Google is necessary and appropriate, not provincial,” they wrote.
At Tuesday press conference, Vestager disputed any suggestion that the European Commission was biased against American companies, saying she had looked through the statistics and could “find no facts to find any support of bias.”