European Union regulators have issued a whopping $2.7 billion (€2.42 billion) fine on Google for violating European antitrust regulations. The search giant was accused of manipulating search results to favor its own shopping service. Google has been given 90 days to fix the problem, and if it doesn't, the EU will hit it with penalty of up to 5% of the average daily global revenue of Alphabet (Google's parent company).
Margrethe Vestager, the Danish politician who is currently serving as the European Commissioner for Competition had this to say:
"Google abused its market dominance as a search engine to promote its own comparison shopping service in search results, whilst demoting those of rivals (…) This is not competition on the merits and is illegal under EU antitrust rules."
The European Commission opened proceedings in this case in November 2010 following a number of complaints by European and U.S. competitors that Google had allegedly breached EU antitrust rules. After an initial investigation, Google sought to address the Commission's concerns by offering legally binding commitments, which the EU officials found to be unsatisfactory.
EU Commissioner of Competition Margrethe Vestager, Source: Getty Images
The Commission has come to a preliminary conclusion that Google has abused its dominant market position in two other cases which are still being investigated. One of them concerns the Android operating system, in which the Commission is concerned that Google pushes phone vendors to use Google services on their devices. While Android is an open-source operating system, Google requires OEMs to abide by the Android Compatibility Definition Document (CDD) in order to be licensed to ship with Google Play Services. The second case includes AdSense, where the Commission is concerned that Google has reduced choice by preventing third-party websites from sourcing search advertisements from Google's competitors. Google may soon face similar fines for said alleged breaches.
Mrs. Vestager explained that the European Commission studied 1.2 billion search inquiries before they came to the conclusion that Google was unfairly manipulating results.
In addition to the decision, the Commission stated that Google has to respect the simple principle of equal treatment in its search results for its own comparison shopping product and rival comparison shopping products. Google has to apply the same processes and methods to position and display rival comparison shopping services in Google's search results pages as it gives to its own comparison shopping service.
Google replied to these accusations with a statement insisting that the company is simply providing the best service possible to its search engine customers. One of their spokespersons responded with the following:
"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. (…) 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."
The European Commission has fined many companies in the last few years for alleged antitrust statute violations. A few years ago, another American giant – Microsoft – was fined for using its dominant desktop OS position to promote Internet Explorer. As a result, the company decided to introduce the browser select window in Windows XP and Windows 7. The Commission is also targeting some smaller telephony carriers for not following its "Roam Like at Home" regulation.
Google Search is the most popular search engine in Europe. According to StaffCounter, users are picking up Google search in over 90 percent of cases. The second search engine in the table, Bing, has just a handful of users.
Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium said that "Europe has been more aggressive in enforcement against monopolies than the U.S." He also added: "In Europe, we're more threatened by the dominance of big companies." Companies such as Google or Microsoft are the leaders in their respective fields, and have to tread carefully to abide by EU regulations when doing business in this lucrative market.
Source: European Commission Via: The New York Times
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