Google fined $2.7 bn in antitrust case

Brussels, June 27

EU antitrust regulators hit Alphabet unit Google with a record 2.42-billion-euro ($2.7 billion) fine on Tuesday, taking a tough line in the first of three investigations into the company’s dominance in searches and smartphones.

It is the biggest fine the European Union has ever imposed on a single company in an antitrust case, exceeding a 1.06-billion-euro sanction handed down to US chipmaker Intel in 2009.

The European Commission said the world’s most popular internet search engine has 90 days to stop favouring its own shopping service or face a further penalty per day of up to 5 per cent of Alphabet’s average daily global turnover.

The fine, equivalent to 3 per cent of Alphabet’s turnover, is the biggest regulatory setback for Google, which settled with US enforcers in 2013 without a penalty after agreeing to change some of its search practices.

The commission found that Google, with a market share in searches of over 90 per cent in most European countries, had systematically given prominent placement in searches to its own comparison shopping service and demoted those of rivals in search results.

“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,” European Competition Commissioner Margrethe Vestager said in a statement.

Google said its data showed people preferred links taking them directly to products they want and not to websites where they have to repeat their search.

“We respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case,” Kent Walker, Google’s general counsel, said in a statement.

The 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.

The penalty payment for failure to comply would amount to around $12 million a day based on Alphabet’s 2016 turnover of $90.3 billion. The Commission did not specify what changes Google had to make.

“This decision is a game-changer. The Commission confirmed that consumers do not see what is most relevant for them on the world’s most used search engine but rather what is best for Google,” said Monique Goyens, director general of EU consumer group BEUC.

Thomas Vinje, legal counsel to FairSearch, welcomed the Commission’s findings and urged it to act on Google’s Android mobile operating system following its 2013 complaint that Google restricted competition in software running on mobile devices.  — Reuters

More trouble ahead

The EU competition enforcer has also charged Google with using its Android mobile operating system to crush rivals, a case that could potentially be the most damaging for the company, with the system used in most smartphones

The commission has also found Google, with over 90% market share in searches in European nations, has given prominent placement in searches to its own shopping service and demoted those of rivals to kill competition

RECORD PENALTY

The fine represents 3 per cent of Alphabet/Google’s turnover in 2016. The biggest sanction prior to that was US chipmaker Intel’s 1.06 billion euro fine in 2009

WHAT THE EU WANTS GOOGLE TO DO

The Commission found that Google had systematically given prominent placement in searches to its own comparison shopping service and demoted those of rivals in search results

It wants the company to stop that, or face additional non-compliance payments of 5 per cent of Alphabet’s average daily global turnover

OTHER REGULATORY ISSUES 

Google and other US-based internet companies face increasing scrutiny and regulation from the EU regarding user privacy and data storage, most recently on messaging, email and voice services

The EU largely expects greater cooperation from tech companies on cyber security and counter-terrorism. Last week’s European Council Summit called for the industry to step up efforts to remove extremist content and disrupt communication support for terrorist acts