Google had been fined a record €2.42 billion by the European Commission for breaching EU antitrust rules.
According to the Commission, Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
It now has 90 days to stop favouring the service or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, its parent company.
Commenting on the fine, commissioner Margrethe Vestager, in charge of competition policy, said: “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.
“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.”
In a description of Google’s strategy for its comparison shopping service, the EC says that Google’s flagship product is the Google search engine and that almost 90% of Google’s revenues stem from adverts, such as those it shows consumers in response to a search query.
In 2004, it entered the separate market of comparison shopping in Europe, with a product that was initially called Froogle and subsequently renamed Google Product Search and Google Shopping. From 2008, Google began to implement in European markets a fundamental change in strategy to push its comparison shopping service. This strategy relied on Google’s dominance in general internet search, instead of competition on the merits in comparison shopping markets.
Google has systematically given prominent placement to its own comparison shopping service. It has also demoted rival comparison shopping services in its search results.
As a result, Google’s comparison shopping service is much more visible to consumers in Google’s search results, whilst rival comparison shopping services are much less visible.
In its summary of the effect of Google’s illegal practices, the Commission says that since the beginning of each abuse, Google’s comparison shopping service has increased its traffic 45-fold in the UK, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy. At the same time, traffic to certain rival sites fell by 85% in the UK, up to 92% in Germany and 80% in France.
These sudden drops could also not be explained by other factors.Some competitors have adapted and managed to recover some traffic but never in full.
Significantly, the Commission says it has already come to the preliminary conclusion that Google has abused a dominant position in two other cases, which are still being investigated. These concern the Android Operating System and AdSense.
Reuters points out that this is the biggest punishment imposed by the Commission on a company to date, far exceeding the €1.06 billion sanction against the US chipmaker Intel in 2009.