Google lost a crucial case in which it was accused of unfair practices by favoring its own search services, thereby hampering rival services. As a result, the E.U. antitrust regulator fined the search giant a record $2.7 billion on Tuesday.
This could complicate things for Google
The seven-year-old case was built upon the belief that Google had been abusing its dominant position by systematically favoring its comparison-shopping service in its search result pages. The case was strengthened by complaints from several small shopping sites and big names such as Microsoft, News Corp., and Axel Springer SE.
Google has 90 days to “stop its illegal conduct” and give equal treatment to the rival services. If it fails to do so, it risks fines of up to 5% of its average daily worldwide revenue. It’s up to Google to decide how it intends to end its unfair practices.
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Ben Van Rompuy, an assistant competition lawyer at Leiden University, told Bloomberg that the E.U. antitrust ruling “seems to be quite simple but is actually quite complicated in the sense that they leave it to Google to come up with a solution.” It won’t be easy for the search giant to tweak its PageRank algorithm, which uses about 200 different factors when placing items in the search results.
E.U. antitrust regulators and U.S. tech firms
EU Competition Commissioner Margrethe Vestager told reporters, “What Google has done is illegal under E.U. antitrust rules. 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.”
The fine imposed by the E.U. is the biggest ever in an antitrust case of this type. The previous highest was the €1.06 billion penalty on Intel in 2009. Even though the fine of $2.7 billion is minute compared to Google’s $90 billion in annual revenue, a penalty of this level does strengthen the E.U.’s claims that they exercise very strict regulations on tech firms.
Previously, Apple had been required to pay $14.5 billion in back taxes in Ireland, while Amazon’s tax practices in Europe were under investigation as well. Authorities have also raised questions about Facebook’s gathering and handling of data.
Google and the E.U.: a match made in hell
Google Senior Vice President Kent Walker defended the company’s practices, arguing that when people search for products online, they want to do it with ease and in little time, and advertisers wish to market the same products. For this reason precisely, Google shows shopping ads that connect buyers with sellers and make it useful for both parties.
In reference to the E.U. antitrust ruling, Walker said, “We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”
Google and the E.U. antitrust regulators have never shared cordial terms, and they have been in a rift over various things all the time. The search giant is facing two more antitrust cases in Europe: one related to Android and another for its AdSense online advertising service. Vestager noted that they might also investigate Google’s maps, travel and restaurant reviews, as there have been complaints related to these services as well.