Record-sized EU fine over Google shopping service

PUBLICATIONS / Articles / 2017 / Record-sized EU fine over Google shopping service
The European Commission has been investigating Google Shopping since late 2010. Now, Google has been fined 2.42bn euros ($2.7bn; £2.1bn) by the European Commission after it ruled the company had abused its power by promoting its shopping comparison service at the top of search results. The amount is the regulator's largest penalty to date against a company accused of distorting the market. The ruling also orders Google to end its anti-competitive practices within 90 days or face a further penalty.

Although the firm may appeal, if it fails to change the way it operates the Shopping service within the three-month deadline, it could be forced to make payments of 5% of its parent company Alphabet's average daily worldwide earnings. Based on the company's most recent financial report, that amounts to about $14m a day.

The commission said it was leaving it to Google to determine what alterations should be made to its Shopping service rather than specifying a remedy.

"What Google has done is illegal under EU antitrust rules," declared Margrethe Vestager, the European Union's Competition Commissioner. "It has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation."

Google hadpreviously suggested that Amazon and eBay have more influence over the public's spending habits and has again said it does not accept the claims made against it.

A spokesman said in response to the ruling: "When you shop online, you want to find the products you're looking for quickly and easily. 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."

This is a big moment in a clash between the EU and the US's tech giants, which has been going on for more than a decade. The commission believes it has struck a blow for consumers and for little firms at a time when online advertising - particularly on mobile phones - is dominated by Google and Facebook.

Google believes the regulator has a weak case and has failed to provide evidence that either consumers or rivals have been harmed. In essence, it sees this as a political move rather than one based on competition law. You can be pretty confident that the Trump administration will share that view.

There's mounting anxiety in European capitals about something called Gafa - Google, Apple, Facebook and Amazon - the four American giants that play such a huge role in all of our lives.

That means we can expect further action to try to limit their powers, with the potential for growing political tension between Brussels and Washington.

Although the penalty is record-sized, it could have been bigger.

The commission has the power to fine Alphabet up to 10 per cent of its annual revenue, which was more than $90bn (£70.8bn) in its last fiancial year.

The alphabet can afford the fine - it currently has more than $172bn of assets.

 

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