Google has been given a record breaking $2.7 billion fine for manipulating search results to give priority to its own shopping service over its competitors. The fine is the biggest ever handed down by European competition authorities for anti-competitive practices.
The figure is equivalent to 3 percent of parent company Alphabet’s annual turnover. According to the statement released by the European Commission, “the company must now end the conduct within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet.” This works out at around $12 million a day based on Alphabet's 2016 turnover of $90.3 billion.
The Commission ruled that, since 2008, Google has been systematically giving prominent placement to its own comparison shopping service, ‘Google Shopping’. By demoting rival comparison shopping services in its search results, Google was able to increase traffic and generate more revenue.
"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,” European Competition Commissioner Margrethe Vestager said in a statement.
“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."
Google, however, disagreed with today’s ruling. They argued that 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.
"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, told Reuters.
Things may yet get worse for Google. This is only the first of three investigations into the company's dominance in searches and smartphones. The company has also been charged with using its Android mobile operating system to crush rivals.
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