EU hammers Google with record $2.7 billion antitrust fine for illegal search manipulation
The European Commission has wrapped up its antitrust investigation against Google, and has decreed that it must pay $2.72 billion to settle charges related to it favoring its own products over rivals in search results.
"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," said European Commission Commissioner Margrethe Vestager in a statement. "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."
Vestager elaborated on the settlement, saying that the penalty was for denying consumers choices, and illegally blocking other companies from fair competition.
Google has 60 days to tell the European Commission how it will accomplish the order, and 90 days to comply with the ruling and stop the search manipulation or additional fines will be imposed. The European Commission can assess up to five percent of Alphabet's daily average worldwide revenue as a penalty, resulting in payments of $12.3 million per day should it persist.
Google believes that the decision is in error, and will likely appeal.
"We believe the European Commission's online shopping decision underestimates the value of those kinds of fast and easy connections," Google said in a statement. "While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches."
Google's alleged antitrust behavior involving Android is still being investigated by the European Commission, as is the AdSense service.
The European Commission investigation into Google's search practices dates back to 2010. Google lobbied the two Competition Commissioners who have held the position over the seven-year duration of the investigation, even proposing a solution that was ultimately determined to be even worse than its practices at the time the initial allegations were made.
In imposing a stiff penalty, a record in the EU for anti-competitive practices by foreign companies trading in the region, the EU will force Google to alter its prized search algorithms, something that it has fought hard against. One of Google's key defenses, that Amazon and eBay are two examples of competition that continues to thrive despite the way Google's search results favor its own services, was ultimately rejected.
Google joins both Intel and Microsoft in running afoul of the EU's tough anticompetitive-actions legislation. Intel, the previous record holder for the largest European Commission fine, was fined 1.06 billion ($1.19 billion) for paying computer makers to use its chips instead of AMD's chips, while Microsoft was hit for force-feeding Internet Explorer at the expense of the competition.
Ultimately, Microsoft ending up paying more for its non-compliance in applying its proposed fix, costing the company an additional 561 million ($632 million) after claiming that its browser selection screen was inadvertently purged in a software update.
"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," said European Commission Commissioner Margrethe Vestager in a statement. "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."
Vestager elaborated on the settlement, saying that the penalty was for denying consumers choices, and illegally blocking other companies from fair competition.
Google has 60 days to tell the European Commission how it will accomplish the order, and 90 days to comply with the ruling and stop the search manipulation or additional fines will be imposed. The European Commission can assess up to five percent of Alphabet's daily average worldwide revenue as a penalty, resulting in payments of $12.3 million per day should it persist.
Google believes that the decision is in error, and will likely appeal.
"We believe the European Commission's online shopping decision underestimates the value of those kinds of fast and easy connections," Google said in a statement. "While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches."
Google's alleged antitrust behavior involving Android is still being investigated by the European Commission, as is the AdSense service.
The European Commission investigation into Google's search practices dates back to 2010. Google lobbied the two Competition Commissioners who have held the position over the seven-year duration of the investigation, even proposing a solution that was ultimately determined to be even worse than its practices at the time the initial allegations were made.
In imposing a stiff penalty, a record in the EU for anti-competitive practices by foreign companies trading in the region, the EU will force Google to alter its prized search algorithms, something that it has fought hard against. One of Google's key defenses, that Amazon and eBay are two examples of competition that continues to thrive despite the way Google's search results favor its own services, was ultimately rejected.
Google joins both Intel and Microsoft in running afoul of the EU's tough anticompetitive-actions legislation. Intel, the previous record holder for the largest European Commission fine, was fined 1.06 billion ($1.19 billion) for paying computer makers to use its chips instead of AMD's chips, while Microsoft was hit for force-feeding Internet Explorer at the expense of the competition.
Ultimately, Microsoft ending up paying more for its non-compliance in applying its proposed fix, costing the company an additional 561 million ($632 million) after claiming that its browser selection screen was inadvertently purged in a software update.
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Comments
While personally a $2B+ fine for favoring (I've seen zero evidence they were blocking anyone else despite Ms. Vestager's comments) seems just a tad excessive considering the goal is to force them to change the way they present product search results which the ruling itself does, it is what it is. The EU Commission is convinced they hold sway over companies no matter where they do business as long as some of that business is in Europe. (I'll have to do some reading to see how that came about as it seems very odd to me.) Google can well afford to pay it, and it doesn't have anything to do with general Google Search results as far as I've read so that should not be affected. But Google competitors do seem to have Ms. Vesteger's ear so this is just the first shoe to drop.
Anyway, if anyone is curious how Google displays Google Shopping and how it can be seen as anti-competitive do a search for some product, perhaps a toaster, and see how Google displays the results. The EU feels the same ranking rules that apply to other shopping sites should also apply to Google's own products, even tho it is their search product that's being used. Once you get to the point of being seen as dominant in your field the EU believes you should play by stricter rules, and in some way I tend to agree.
Now is the EU unfairly targeting big US techs? I've not really firmly formed my own opinion on that yet. The quick-take would be... maybe. The EU is still chasing Apple for a few $B, Facebook was fined there in recent months for misleading the EU Commission, Amazon had to change the way they market books there or face fines, and very recently Nike and Comcast also have had new antitrust investigations targeting their practices opened by Ms. Vestager and the EU Commission.
There's also the so far rarely mentioned look by the EU into possible anticompetitive practices in the Apple App Store and Google Play where Ms. Vestager may try to make many of the same arguments she did in this case. More fun to come.
Back a few years when Google used to rank your website by relevance to the search (remember those days ?) our website was top of almost every possible relevant search. After 6 months of being bombarded by and rebuffing telephone calls from Google "suggesting" we started paying for Adwords we suddenly, overnight, fell off a cliff to the extent that even I couldn't find our entry using the same search words.
Miraculously within hours of signing up for Adwords, guess what ? Yes, we were back at the top again.
So I don't have a problem with the fine.
By the way iagree with Google, links to other search sites just waste my time. The last thing we need is crappy service from Google because the EU can't compete.
Google is abusing its dominance in search to make its own services competitive where they would not be otherwise. So much for their motto, "Don't be evil."
The real issue isn't the fine. Google has 60 days to change their practices. If they don't, they will face additional fines which will be ongoing.
Amd Google is by no means finished. There is the tax issue which is similar to the one Apple faced and it will very likely result in much larger fines. There is also the issue of Android.
I personally never use Google search anymore. I do product searches on Amazon. For local services, I use Yelp. I do lots of voice searches using Siri or Amazon's Echo. I hope samsung brings Bixby to the Gear S3 line of watches. I will very likely be purchasing the HomePod when it is released for the superior acoustics. The Invoke by Samsung's Harman unit looks to be quite interesting also.
Other than an occasional instructional YouTube video, I don't have any plans to use any other Google products. I don't "need" them and most certainly don't want them.
Schmidt is worse than Gates even at Microsoft's worst. At least Gates has become a philanthropist. Schmidt does not even do that. And now he can try to figure out how to navigate Google out of the mess he has created.
Google search is going to be forced to adopt a new model. Android is going to go into irrelevance once the FTC and Apple are finished with Qualcomm. Samsung is going to displace Android with Tizen, using Bixby for search. Cutting edge mobile CPUs will belong to Apple and Samsung. It means that Android gets relegated to poorly performing mobile devices.
I for one won't miss Google when that day happens. Not one iota.
If would read the article then you understand that the fine is about the Google search service as such, which is recognized as the best service available.
But it is forbidden by European competition law to use the monopoly in one domain in order to get an advantage in another domain. As Google has a monopoly in search (>90% market search in the EU), Google is not allowed to give its other products (Google shopping in this case) a higher ranking in the search results.
There are simular cases with european companies. also in local markets.
As for targeting US companies. No. The biggest fines have been mainly set for US companies but that is because those companies have been proportionally bigger. EU companies get fined too, not only for abusing dominant positions but also for things like price fixing or unjust unfair competition in the classic sense. Some of the fines are large enough to put severe financial stress on the affected companies.
I know of one particular case in the chemicals industry where, for simply attending an invite to a meeting, a company got fined over 50 million euros. The (American) multinational that was (according to my client) responsible for the meeting and the proposals was the one that finally pulled the rug from the others, reported the case to the EU and was not fined.
In this case against Google I haven't read through the available material so I can't really give an opinion on whether I consider it just or not. However, generally speaking I tend to support the investigations of the commission when it comes to antitrust cases.
If this case, and others in progress, lead to more competition and a more even playing field, it is a good thing.