Google hit with record $2.7bn EU fine

Google has been fined 2.42bn euros ($2.7bn; £2.1bn) by the European Commission after it ruled the company had abused its power by promoting its own shopping comparison service at the top of search results.

The amount is the regulator’s largest penalty to date against a company accused of distorting the market.

The ruling also orders Google to end its anti-competitive practices within 90 days or face a further penalty.

The US firm said it may appeal.

However, if it fails to change the way it operates the Shopping service within the three-month deadline, it could be forced to make payments of 5% of its parent company Alphabet’s average daily worldwide earnings.

Based on the company’s most recent financial report, that amounts to about $14m a day.

“What Google has done is illegal under EU antitrust rules,” declared Margrethe Vestager, the European Union’s Competition Commissioner.

“It has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation.”

Google had previously suggested that Amazon and eBay had more influence over the public’s spending habits and has again said it does not accept the claims made against it.

“When you shop online, you want to find the products you’re looking for quickly and easily,” a spokesman said in response to the ruling.

“And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.

“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 decision could now set a precedent that determines how the EU’s civil service handles related complaints about the prominence Google gives to its own maps, flight price results and local business listings within its search tools.

Fast growth

Google Shopping displays relevant products’ images and prices alongside the names of shops they are available from and review scores, if available.

The details are labelled as being “sponsored”, reflecting the fact that, unlike normal search results, they only include items that sellers have paid to appear.

On smartphones, the facility typically dominates “above-the-fold” content, meaning users might not see any traditional links unless they scroll down.

Google also benefits from the fact the Shopping service adverts are more visual than its text-based ads.

One recent study suggested Shopping accounts for 74% of all retail-related ads clicked on within Google Search results. However, the BBC understands Google’s own data indicates the true figure is smaller.

Seven-year probe

The European Commission has been investigating Google Shopping since late 2010.

The probe was spurred on by complaints from Microsoft, among others.

The rival tech giant has opted not to comment on the ruling, after the two struck a deal last year to try to avoid such legal battles in the future.

But one price comparison service has welcomed the fine.

“An entire industry has suffered because of Google’s unlawful, anticompetitive behaviour, and it has become a genuine struggle for survival for the likes of [us],” the chief executive of Kelkoo Richard Stables told the BBC.

“At the same time, Google’s abuse has raised costs for merchants, and it has meant higher prices for consumers and much more limited choice.”

Although the penalty is record-sized, it could have been bigger.

The commission has the power to fine Alphabet up to 10% of its annual revenue, which was more than $90bn (£70.8bn) in its last financial year.

Alphabet can afford the fine - it currently has more than $172bn of assets.

But one expert said the company would be more concerned about the impact on its future operations.

“If it has to change the appearance of it results and rankings, that’s going to have an impact on how it can monetise search,” said Chris Green, from the tech consultancy Lewis.

“Right now, the way that Google prioritises some of its retail and commercial services generates quite a lot of ad income.

“When you consider the sheer number of search queries that Google handles on a daily basis, that’s a lot of ad inventory going in front of a lot of eyeballs.

“Dent that by even a few percentage points, and there’s quite a big financial drop.”

Source: BBC