Google has been fined by the European Commission at a tune of $2.7 billion. According to the European Regulator, the California-based tech giant has been accused of using its dominance to promote its own shopping services on its organic search traffic at the expense of other competitors. The fine is simply a culmination of long investigations into the practices the search giant explores in its business. This is one of the biggest fines ever imposed on a company and there is no doubt that it will increase the tensions between the European Commission and Silicon Valley. The fine might also trigger other investigations into Google’s way of doing business and more fines could follow.
After all, there are two additional investigations that are going on. The first one is looking into the possibility of Google’s abuse of its dominance in the Android phone market. There is also an investigation into the purported use of Google AdSense to prevent advertisers from partnering with other search engines. According to the Competition Commissioner in Europe, Margrethe Vestager, Google broke the EU antitrust rules by denying other companies the chance to compete on innovation and merit. The Commissioner said that by so doing, Google denied consumers in Europe the opportunity of making a choice between various options and the full benefits they offer.
Google released a statement immediately after the fine was slapped saying that it respectfully disagreed with the ruling. The American technology company also noted that it was considering an appeal. The company seemed shocked with this huge fine, similar to the public. In fact, before this latest announcement, the expectation was that the search giant would have to pay somewhere around the €1 billion mark. But clearly it has to pay double and this makes the fine the largest financial monopoly penalty imposed on a company after Intel paid €1.06 billion back in 2008. At the time, this was 3% of total Intel sales that year.
The investigation that resulted in this penalty targeted Google’s shopping service. The search giant enjoys nearly 90% of market share in Europe as a search engine and as such, it was deemed illegal to place its own ads on search engine results ahead of those of competitors. Vestager said that while she recognized the role Google has played in coming with innovative products to benefit the European market, its model on the shopping services was not good enough. She noted that according to the EU laws, a company is not allowed to abuse its power or dominance in the market to get an advantage over its competitors.
She added that the investigation proved that indeed Google had done exactly that and as such, the fine was justified. It’s not really clear whether the search giant will pay the fine or not. In addition to this, with the appeal set to come almost inevitably, it would be interesting to see the kind of direction this whole case will take. Nonetheless, it seems the EU means business and it will not be a surprise if other investigations that are ongoing on the company’s business practices lead to more fines.