Google Fined Record $2.7 Billion By EU For Alleged Online Search Misdeeds

When the European Union comes at technology firms for perceived antitrust violations, it comes at them hard. Such is the case yet again, this time with the European Commission issuing a record-breaking fine of €2.42 billion (around $2.7 billion in U.S. currency) to Google for running afoul of antitrust law. The fine is more than double the previous largest penalty issued for an antitrust violation.

Following a seven-year investigation, the EU determined that Google abused its dominant market position to promote its own comparison shopping results while actively suppressing the competition. Should the decision be upheld pending an inevitable appeal, it would force Google to rethink how it presents online shopping comparison results in Europe, along with results from other products and services.

Google Search

"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 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," Vestager added.

At issue here is how search results are presented. If a user looks up an item such as a "MacBook Pro" on Google, at the top of the search results is a sponsored section containing price comparisons from different vendors. Online sellers pay Google to appear there, and in return the listings link directly to the product.

The EU feels it is unfair for Google to give its own comparison shopping results "prominent placement" at or near the top of its search results while demoting rival comparison shopping services. Furthermore, Google's own shopping results are not subject to its generic algorithms, including demotions.

So what does Google have to say about this?

"We believe the European Commission’s online shopping decision underestimates the value of those kinds of fast and easy connections. 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 Kent Walker stated in a blog post.

Google's stance is that its current shopping results are both useful and much improved over the text-only ads it showed a decade ago. The search giant also points out that thousands of European merchants use its online shopping ads to compete with larger companies, such as Amazon and eBay.

"When you use Google to search for products, we try to give you what you’re looking for. Our ability to do that well isn’t favoring ourselves, or any particular site or seller—it’s the result of hard work and constant innovation, based on user feedback," Walker added.

Google is considering an appeal. In the meantime, it's on the hook for a massive penalty. If Google does not make changes to appease the EU within 90 days, it will face more fines of up to 5 percent the average daily worldwide turnover of parent company Alphabet.