Google’s wallet is about to get just slightly lighter thanks to a hefty fine from the European Commission. While the €2.42 billion fine isn’t going to bankrupt the search giant, it’s the message the European Commission is sending that matters. The European Commission has accused Google of breaking antitrust rules and abusing their search engine dominance. In essence, the EC says Google used its position to give its own products an advantage over others. Google has 90 days to cease its illegal practices or they will face additional fines of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. 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.
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.”
Two of the main points that led the EC to this decision was that Google systematically gave prominent placement of its own products and demoted rival brands.
- Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google’s comparison shopping service wants to show results, these are displayed at or near the top of the search results.
- Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google’s search results on the basis of Google’s generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted. Evidence shows that even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions.
The fine itself isn’t going to mean much to Google’s wallet unless they don’t comply and start facing the 5% penalty against its parent company, Alphabet. It will be interesting to see what Google does next in this case. You can read the EC’s full press release at the link below in case you’re interested in all of the fine details.
Last Updated on June 27, 2017.