Google faces 2.42 bn euros fine for antitrust rules breach

Fine Margrethe Vestager

The European Commission has announced a record-breaking 2.42 billion euro fine has been levied on Google for breaking EU antitrust regulations.

Seven large US tech companies had written to the EU's antitrust watchdog urging it to go ahead with what ended up being a record fine on the world's most-used search engine for obstructing competition and "stifling innovation". It wasn't just about making its product better than those of its rivals.

The company reiterated its former statements that mega-retailers like Amazon and eBay remain the first destination for most online searches.

Despite Google's dominance, the service had initially struggled to make headway against the established players within the market. It also leaves other tech companies wondering how far Vestager may go to force US tech giants to concede more ground to smaller competitors.

The $2.7 billion fine might be a drop in the ocean for Google, which boasts of cash reserves of $90 billion but it needs to be noted that a large part of its revenues depends on these tactics and it remains to be seen how the company handles these issues going forward.

"What Google has done is illegal under European Union antitrust rules", she said.

"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". "We compete with Amazon and other sites for shopping-related searches by showing ever more useful product information".

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

"When you shop online, you want to find the products you're looking for quickly and easily", said Google senior VP and general counsel Kent Walker.

Google points to those two websites when tackling the question of why these other shopping comparison sites haven't grown.

The EU complaint is not about convenience, however.

But this is far from the first time the European Commission has penalised USA tech giants for what it views to be bad behaviour.

Traffic to the Google Shopping site increased by 45 times in the United Kingdom alone as the result of search results promotion, while traffic to certain competitor websites in the United Kingdom suddenly decreased by 85% - an event that could not be explained by factors other than the change in search engine results. "That's where the real damage could be done".

The Commission's action follows a seven-year investigation prompted by scores of complaints from rivals such as US consumer review website Yelp, TripAdvisor, UK price comparison site Foundem, News Corp and lobbying group FairSearch.

European regulators have in the past investigated Microsoft, Intel, Apple, Google, Facebook and Amazon, raising claims that Brussels was waging a war against the Silicon Valley, but the claim has been denied by the Commission. "However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets".

The business has been given 90 days to cease these practices or face further penalties.

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