Why is Google Being Fined $2.7 Billion by the EU?

Prayank

After a seven-year long investigation, the European Union (EU) has fined Google with a record $2.7 billion for breaching an anti-trust law. This makes it the highest fine handed out by EU to a single company as part of an antitrust judgement, trumping the €1 billion fine doled out to Intel in 2009.

After an investigation into its search algorithm, Google has been found guilty of presenting biased search results which favoured its own shopping comparison service.

It was found that Google was showcasing results from Google Shopping, even if they weren’t relevant to the user’s query — eating into the visits which would’ve gone to rival shopping price comparison websites.

“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,” said Commissioner Margrethe Vestager who is in charge of the competition policy.

How did Google Breach the Antitrust Law?

Google Shopping is an online e-commerce website via which various merchants sell their products and Google receives a commission on every sale. More traffic to the website means more chances of sales and more money for Google.

The $2.7 billion fine has been calculated on the basis of Google’s revenue from its Google Shopping service in the 13 countries in the European Economic Area (EEA) it has found to be misusing its dominance in the market.

The Commission found out that ‘Google has systematically given prominent placement to its own comparison shopping service’ and ‘has demoted rival comparison shopping services in its search results’.

“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.

According to the Commission’s report, since Google began abusing its market dominance, Google Shopping services’ traffic increased by 45-times in UK, 35-times in Germany, 19-times in France, 29-times in Netherlands, 17-times in Spain and 14-times in Italy.

Google ‘Respectfully Disagrees’

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While the EU Commissioner is convinced that Google is at fault, the company has denied malpractice and ‘respectfully disagrees’ with the judgement, citing examples of companies like Amazon and eBay which have grown during the same period.

So much so that the search engine giant calls Amazon a ‘formidable competitor’ who has become ‘the first port of call for product searches.

“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 stated.

What Happens Now?

According to the judgement, Google will need to ‘stop its illegal conduct within 90 days of the decision and refrain from any measure that has the same or an equivalent object or effect’ and also want the company to treat their rival companies fairly.

If Google fails to comply, they’ll have to pay an additional non-compliance fine in the tune of 5% of the average daily turnover of Google’s parent company Alphabet.

While Google is considering a plea to reverse the judgement, they’re also being investigated by the Commission in two other cases where they fear that the company is abusing its dominant position — the Android Operating System and Adsense.

Maintaining a level play field which isn’t lopsided due to a power player in the midst is necessary to root out any monopoly on the internet and if EU’s judgement has a concrete basis, then Google must make amends to their algorithm or else lose face and be branded a cyber bully.

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Prayank

Written By

Prayank

Bike enthusiast, traveller, ManUtd follower, army brat, word-smith; Delhi University, Asian College of Journalism, Cardiff University alumnus; a journalist breathing tech these days.