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EU Fines Google $2.7 Billion for Favoring Its Own Ads

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Tuesday, 27 Jun 2017 08:31 AM

The EU hit Google with a record $2.7 billion fine on Tuesday for illegally favoring its shopping service ads in search results.

Hard-charging European Commission competition chief Margrethe Vestager said the tech giant "abused its market dominance" as the world's most popular search engine to give an advantage to its Google Shopping service, reported Agence France-Presse.

"What Google has done is illegal under EU antitrust rules," Denmark's Vestager told a news conference in Brussels.

"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 now has 90 days to "end this conduct" or face further fines, Vestager said. These could amount to five percent of Google's daily revenue, she added, a penalty of roughly $14 million a day.

The fine broke the previous European Union record for a monopoly case against US chipmaker Intel of 1.06 billion euros in 2009.

Google said it "respectfully" disagreed with the EU decision, which followed a seven-year investigation, and may appeal.

"When you shop online, you want to find the products you're looking for quickly and easily. And advertisers want to promote those same products," Kent Walker, Google's senior vice president and general counsel, said in a statement.

"That's why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.

"We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case."

Google Shopping shows the images and prices of products in response to searches about shopping when someone uses the search engine.

Brussels accuses Google of giving its own service too much priority in search results to the detriment of other price comparison services, such as TripAdvisor and Expedia.

The EU alleges that in 2008 Google embarked on a "fundamental change in strategy" by devoting top of the page priority to Google Shopping, pushing rivals further down the page.

"This decision is a game-changer," said Monique Goyens, head of the European Consumer Organisation which was also involved in the case.

"Google's market dominance has given the company power to decide the fate of all but the biggest online service providers – in other words nearly every company," said Fairsearch, a lobby of complainants, in a statement.

The verdict comes less than a year after Vestager shocked Washington and the world with an order that iPhone manufacturer Apple repay 13 billion euros in back taxes in Ireland.

The Google fine could also set an important precedent for other Google services, such as for images, news and travel that have also received complaints from rivals.

While an EU record, the amount is below the maximum possible of more than 8 billion euros or 10 percent of Google's total revenue of $90 billion last year.

The case, launched in 2010, is one of three against Google and of several against blockbuster U.S. companies including Starbucks, Apple, Amazon and McDonalds.

In the other Google cases, the EU is examining Google's AdSense advertising service and its Android mobile phone software.

Vestager said "preliminary conclusions" in the Android and AdSense cases showed Google also breached EU rules.

The decision come after a long negotiation period with many twists and turns.

Vestager's predecessor, the Spaniard Joaquin Almunia, made three attempts to resolve the dispute amicably but each time pressure by national governments, rivals and privacy advocates scuppered the effort.

The Google fine will almost certainly face a gruelling appeals process through the EU court in Luxembourg.

The 2009 fine against Intel is still snaking its way through the court, with an appeal decision not expected until next year.

© AFP 2017

 
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The EU hit Google with a record $2.7 billion fine on Tuesday for illegally favoring its shopping service ads in search results.
eu, fines, google
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2017-31-27
Tuesday, 27 Jun 2017 08:31 AM
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