In a move that shows governments may be finally willing to stand up against the Internet giant, the European Union’s Antitrust Commission recently announced that it has fined Google 2.42 billion euros ($2.7 billion USD) for violating the EU’s antitrust laws. As the world’s most-used search engine, Google is alleged to have used its dominance in order to give an illegal and unfair advantage to one of its companion services—Google Shopping.
Google’s Antitrust Violations
The EU alleges that Google used its virtual monopoly of online searching to directly promote its own shopping service at the expense of its competitors. According to EU Commissioner Margrethe Vestager, Google’s actions essentially left consumers without a ‘genuine choice’ and deprived other online retailers from being able to compete.
As part of its investigation, the commission found that Google routinely promoted its own shopping services and always showed them at the top of the page. Competitors’ shopping sites, on the other hand, were demoted in the search rankings and were generally shown much further down on the page or even on another page.
How Will the Fine Affect Google?
The record $2.42 billion fine is the culmination of a seven-year long investigation by the EU. Although the fine is more than double the previous EU-record antitrust fine of 1.06 billion euros given to Intel in 2009, things could still have turned out much worse for Google as the commission could have levied a penalty of up to 10% of its yearly revenue, which would’ve meant a fine of up to $9 billion.
The fine is actually being imposed on Google’s parent company Alphabet, whose shares dropped by just over 1% when the penalty was announced. Nonetheless, it doesn’t seem that the fine will hurt all that much considering that Alphabet’s yearly revenues total over $90 billion. Similarly, the company is in possession of over $92 billion in cash alone.
In addition to the fine, Google was given 90 days to stop the illegal practices. If it is found to continue giving its own shopping service an unfair advantage after the 90 days, it could then face additional fines of up 5% of its daily revenues or around $12 million per day.
Google is also facing two additional EU antitrust lawsuits and this recent ruling may mean that other countries begin looking more closely at the company’s behavior. There are some who are hoping that it could mean that the United States finally starts scrutinizing Google, but due to the differences in EU and US antitrust rules, it currently looks unlikely that the search giant will find itself facing penalties in the US anytime soon.
For its part, Google has continued to deny any wrongdoing and has stated that it will appeal the decision for the courts. As this process will likely take several years, this definitely isn’t the last we’ll hear about the case. Still, it also remains to be seen exactly what steps Google can and will need to take in order to bring its practices in line with the law.