By Jody Coultas, J.D.
After a long investigation into Google’s business practices, the European Commission (EC) has fined Google €2.42 billion (approximately $2.73 billion) for breaching the European Union’s antitrust rules by abusing its dominance in the market for Internet search services and search advertising. The announcement states that Google has 90 days to end the conduct at issue or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, Google's parent company.
Google is dominant in general Internet search markets throughout the European Economic Area, exceeding 90 percent in most countries. In 2004, Google entered the market of comparison shopping in Europe. "Google Shopping" allows consumers to compare products and prices online and to find deals from online retailers and other re-sellers. The markets for general search and comparison shopping are separate, and Google faced competition from a number of alternative providers of comparison shopping.
In April 2015, the EC sent a Statement of Objections (SO) to Google, informing Google of the EC’s preliminary conclusions that the company treats its comparison shopping service more favorably in search results than rival services. Google's practices amounted to an abuse of Google's dominant position in general Internet search services by stifling competition in comparison shopping markets, according to the EC. The SO also alleged that Google artificially restricted the ability of its competitors to place search advertisements on third-party websites. This effort to restrict competitors was intended to maximize traffic to Google’s own websites, according to the EC. Following the filing of the company’s formal response in August 2015, Google Senior Vice President & General Counsel Kent Walker stated that the SO was "wrong as a matter of fact, law, and economics."
The EC found that Google's illegal practices allowed its comparison shopping service to make significant gains in consumer traffic at the expense of its rivals and to the detriment of European consumers. Since the beginning of each abuse, Google’s comparison shopping service increased its traffic 45-fold in the United Kingdom, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain, and 14-fold in Italy. Traffic to rival comparison shopping services dropped significantly. The illegal practices deprived European consumers of genuine choice and innovation, according to the EC.
"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," said EC Commissioner Margrethe Vestager.
Fines. In addition to the €2.42 billion fine, Google must within 90 days begin giving equal treatment to rival comparison shopping services and its own service and applying 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. It is Google’s responsibility to ensure compliance, and Google must explain how it intends to do so.
Google’s response. Google’s Senior Vice President and General Counsel Kent Walker stated that Google will review the decision and consider an appeal. "While some comparison shopping sites naturally want Google to show them more prominently, our data shows that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their search."
Additional investigations. The Commission has already come to the preliminary conclusion that Google has abused a dominant position through its Android operating system and AdSense. The Commission is concerned that Google has stifled choice and innovation in a range of mobile apps and services by pursuing an overall strategy on mobile devices to protect and expand its dominant position in general Internet search services, and that Google has reduced choice by preventing third-party websites from sourcing search ads from Google's competitors.
Companies: Alphabet Inc.; Google Inc.
MainStory: TopStory Antitrust
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