- Justin Sullivan/Getty Images
LONDON – On Tuesday, Google got slapped with a mammoth €2.4 billion fine (£2.1 billion, or $2.7 billion) by the European Commission over an antitrust case.
It’s a record-breaking fine, more than twice as large as the previous largest monopoly case – and it could be just the start of Google’s headache in Europe.
The Californian search engine now faces potential disruption on three major fronts: Two more European antitrust investigations, with the potential to be far more damaging to the company; the threat of lawsuits in national courts by companies allegedly harmed by Google’s businesses practices; and the hint of future European Commission investigations into other sections of the company.
€2.4 billion. It’s a lot. But it’s not the end of the world.
- Shona Ghosh/Business Insider
The €2.4 billion fine is the culmination of a years-long investigation by the European Commission into Google Shopping. The regulator argues that its placement at the top of Google’s search results amounts to illegal anticompetitive behaviour, with Google abusing its dominant position in the European search market to promote the product at the expense of competitors.
Google has been ordered to pay a €2.4 billion fine, and change its practices within 90 days or face additional fines of up to 5% of daily worldwide turnover.
Google is considering whether to appeal, but in a research note for investors published on Tuesday, Goldman Sachs argues that the fine (while big) isn’t going to ruin Google. “We do not believe the fine, if ultimately paid, would have a material effect on Alphabet’s business or its liquidity,” analysts wrote.
What may be more significant is what comes next.
Two more antitrust investigations are underway
The shopping case was just one of a trio of European Commission investigations into Google. The others are into Android, its mobile operating system, and AdSense, its advertising business.
These other two are still underway (competition commissioner Margrethe Vestager didn’t give any indication on Tuesday as to when they might be concluded). They are far more fundamental parts of Google’s business than its shopping service, and if Google is found to have broken EU law and forced to make changes to the way it operates, it could have more far-reaching consequences for how the company can operate and offer its services on the continent.
Plus, there’s the possibility of further multi-billion euro fines.
There is now the risk of legal battles with competitors
- REUTERS/Francois Lenoir
Google could now get bogged down in legal battles with competing shopping comparison sites, if any feel like they were damaged by the company’s practices.
“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 European Commission said in a statement.
“The new EU Antitrust Damages Directive makes it easier for victims of anticompetitive practices to obtain damages.”
The European Commission has hinted at the possibility of further investigations
Lastly – and perhaps most worryingly for Google – the European Commission has also hinted that the Google Shopping ruling could act as a precursor to further investigations of whether Google abused its dominance in search to promote its products (in addition to the Android/AdSense investigations).
“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,” Vestager said on Tuesday. “At the same time, we will have to take care of the characteristics … and of course the facts of the specific case.”
She added: “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.”
Individually, any one of these would be a major headache for Google. Collectively, they add up to a nightmare that might not end for years to come.