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The European Commission announced today that it has hit Google with a $2.72 billion antitrust penalty for abusing its dominance in search to boost its comparison shopping service.
Underscoring the severity of the violations, the amount is more than double the previous record, the $1.2 billion levied against Intel in 2009. Perhaps even more ominous for Google, the EC confirmed in its statement that it was preparing to rule against the company in two additional antitrust cases that are still pending, and may even be considering extending the scope of its probe to other services offered by the search giant.
In issuing the massive fine, EC regulators emphasized the extensive investigation they had conducted into Google’s actions and the impact they found Google had on competing services.
“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing,” Margrethe Vestager, the EC commissioner in charge of competition policy, said in a statement. “But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. 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.”
Google said it did not agree with the ruling and is exploring its options for an appeal.
“We respectfully disagree with the conclusions announced today,” said Kent Walker, Google’s senior vice president and general counsel, 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.”
The result was the latest blow for Google as it tries to navigate a rocky relationship with regulators, both at the EC level and with those pressing various complaints among member states. While Google has been trying to make its case to investigators, and the large public at large, it appears the company’s legal headaches may only get worse from here on out.
In bringing the fine, the EC said it “has already come to the preliminary conclusion that Google has abused a dominant position in two other cases, which are still being investigated.” Those cases involve Google’s Android mobile operating system and AdSense. In both cases, the EC believes Google may have used its power to limit choices and access to third-party competing services.
Yet this may only be the beginning, according to the EC’s statement.
“The Commission also continues to examine Google’s treatment in its search results of other specialized Google search services,” the commission wrote. “Today’s Decision is a precedent which establishes the framework for the assessment of the legality of this type of conduct. At the same time, it does not replace the need for a case-specific analysis to account for the specific characteristics of each market.”
This specific shopping comparison case was first brought in April 2015. The EC noted that while Google first launched a comparison shopping service in Europe back in 2004, that flopped. In 2008, according to the EC, Google changed tactics and began to systematically place results from its own shopping service above those of its rivals.
Google’s search engine market share in Europe is above 90 percent, far higher than in the United States. EC officials said this change had the effect of slashing search engine traffic to competing services.
The EC found that as Google rolled this change out across Europe, rival shopping services in the U.K. saw traffic drop by 85 percent, while in Germany traffic fell by 92 percent, and in France by 80 percent.
“These sudden drops could also not be explained by other factors,” the EC wrote. “Some competitors have adapted and managed to recover some traffic but never in full.”
In response, Google said it believes the EC continues to fundamentally misunderstand the dynamics of the marketplace for comparison search services. Google argued that the growing might of platforms such as Amazon and eBay in Europe have been also having a big impact on consumer behavior. By contrast, Google believes its shopping search results are a benefit to customers looking for quick answers and to smaller merchants who are trying to compete against the likes of Amazon and eBay.
“When you shop online, you want to find the products you’re looking for quickly and easily,” said Google’s Walker in his statement. “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 believe the European Commission’s online shopping decision underestimates the value of those kinds of fast and easy connections. While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches.”
In addition to paying the fine, Google was ordered to end the practice within 90 days or face additional financial penalties. The EC also said Google could now be found liable in further civil actions brought by member states, as well as by companies that were impacted by its anticompetitive behavior.
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