Mon | Aug 21, 2017

Google fined record €2.4b in EU antitrust case

Published:Wednesday | June 28, 2017 | 6:00 AM
European Union Commissioner for Competition Margrethe Vestager speaks during a media conference at EU headquarters in Brussels on Tuesday, June 27, 2017. The European Union's competition watchdog has fined internet giant Google over its online shopping service. (AP Photo/Virginia Mayo)

After a seven-year legal battle, European authorities came down hard on Google on Tuesday for taking advantage of its dominance in online searches to direct customers to its own businesses, fining the tech giant a record €2.42 billion (US$2.72 billion) and raising the prospect of more.

A years-long analysis of Google's online search results showed that the company lists links to its own online shopping services above those of rivals, European regulators said.

On average, Google lists search results to its biggest rivals in online shopping only on page 4 - and smaller rivals even lower. That's a huge advantage for Google when 90 per cent of use-clicks are on page one.

The ruling that Google is taking advantage of its market dominance in online searches paves the way for a broader crackdown by the EU, which is investigating several other Google businesses, like its online images and travel businesses.

"What Google has done is illegal under EU 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," EU Competition Commissioner Margrethe Vestager told reporters.

To avoid more pain in Europe, Google will have to change the way it does business in the region. It has 90 days to stop favouring its own links to online shopping or face more fines of up to 5 per cent of the average daily worldwide revenue of parent company Alphabet.

Google says it is considering an appeal and maintains it's just trying to package its search results in a way that makes it easier for consumers to find what they want.

"When you shop online, you want to find the products you're looking for quickly and easily. 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," Kent Walker, senior vice-president at Google, said in a statement.

"We will review the commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case," he said.

The fine is the highest ever imposed in Europe for anti-competitive behaviour, exceeding a 1.06 billion euros penalty on Silicon Valley chip maker Intel in 2009.

The penalty itself is unlikely to leave a dent in Google's finances. Alphabet has more than US$92 billion (€82 billion) in cash, including nearly US$56 billion (€50 billion) in accounts outside of Europe.

But it could affect Google's way of doing business in the longer term. US interest groups were quick to latch on to the European ruling to argue that a similar approach be taken in the United States.

"Some may object to the EU moving so aggressively against US-based companies, but these authorities are at least trying to deal with some of the new competitive challenges facing our economy," said the News Media Alliance. "US lawmakers and regulatory authorities, by contrast, have been 'asleep at the switch' for far too long."

"We will monitor Google's compliance closely," Vestager said.

She noted that any company or person who has suffered damages due to the company's practices can make claims to national courts.

More broadly, Vestager said, the probe has established that Google is dominant in general Internet search in all 31 countries of the European economic area. This will affect other cases the commission might build against the Internet giant's various businesses, like Google Images.

She also noted that regulators are making "good progress" in its other Google probes into Android and search advertising, and that the "preliminary conclusion" is that they breach EU antitrust rules.

The commission has come under fire in the United States for a perceived bias against US companies.

Vestager said she has examined statistics concerning antitrust, merger control and state aid decisions and that "I can find no facts to support any kind of bias."

- AP