EU Hits Google With A Record Antitrust Fine Of $2.7 Billion

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Google has been fined a record 2.4 billion euros ($2.7 billion) after EU antitrust regulators concluded the first stage of their three-pronged probe into the world’s most popular search engine.

The fine, which targets the company’s shopping business, is the largest doled out by Brussels for a monopoly abuse case and follows a seven-year-long investigation into the search group’s practices.

“Google has abused its dominance as a search engine by giving illegal advantages to another Google product, its shopping comparison service,” Commissioner Margrethe Vestager, the member of the European Commission in charge of competition, told a press conference on Tuesday.

 Investigations were triggered after the European Commission received dozens of complaints from U.S. and European competitors, who claimed that the company abused its search market dominance to give its Google Shopping service an advantage over other retailers and create a monopoly over consumers.

Though the company was charged with distorting internet results by the EU competition authority in April 2015 it has not before faced fines for an abuse of this nature and marks something of a landmark for the way technology companies are regulated.

The business has been given 90 days to cease these practices or it will face further penalty payments.

This may include non-compliance payments of up to 5 percent of Alphabet’s daily worldwide turnover. Alphabet is the parent company of Google.

Google has since announced that it will consider appealing against the decision to the highest court in Europe, the European Court of Justice, which will be its final hope of undoing the charges.

EU regulatory guidelines stipulate that such fines are capped at up to 10 percent of the company’s global turnover.

As part of parent company Alphabet, Google could have been slammed with a charge of up to $9 billion based on its 2016 turnover.

Google CEO Sundar Pichai – Getty Images

While the final bill fell short of this, it eclipses the 1 billion euro ($1.45 billion) fine doled out to chipmaker Intel in 2009. It is also higher than estimates cited by sources in the lead up to the verdict.

Alphabet’s share price dropped 1.4 percent on the announcement in pre-market trade.

Regulators are continuing to investigate two other charges, including whether the Android mobile operating system is being used to promote other Google products at an unfair disadvantage to rivals.

The ruling may also open the way for private litigants to seek compensation for damages at national courts.

“EU antitrust rules apply to all companies that operate in Europe’s Economic Area, no matter where they’re based,” Vestager continued. “The purpose is to ensure competition and innovation for the benefit of European consumers.

Google has come up with many innovative products, and many innovative services, that have made a difference in our lives – and that’s a good thing.”

“But Google’s strategy for its comparison shopping service wasn’t just about attracting customers.

It wasn’t just about making its product better than its rivals. Google has abused its market dominance in its search engine by promoting its own shopping comparison site in its search results and demoting its competitors.”

Google, which makes most of its money from advertising, has argued that the European Commission’s theory ” just doesn’t fit the reality of how most people shop online.”

“They reach merchant websites in many different ways: via general search engines, specialist search services, merchant platforms, social media sites, and online ads served by various companies,” Kent Walker, Google’s general counsel, has written.

“And of course, merchants are reaching consumers directly like never before. On the mobile web — and more than half of Europe’s Internet traffic is mobile these days — dedicated apps are the most common way for consumers to shop.”

Source: CNBC

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