Wed, Jun 28, 2017 - Page 11 News List

EU hands Google record fine of 2.4 billion euros

GETTING RESULTS?EU official Margrethe Vestager said the firm’s strategy ‘denied other companies the chance to compete’ on merit and to innovate

Bloomberg

European Commissioner for Competition Margrethe Vestager gestures at a news conference on an antitrust case against US search engine Google at the European Commission in Brussels yesterday.

Photo: AFP

Google lost its biggest regulatory battle yet after being handed a record 2.4 billion euro (US$2.7 billion) fine by the EU, which said the search-engine giant skewed results in its favor to thwart smaller shopping search services.

Alphabet Inc’s Google has 90 days to “stop its illegal conduct” and give equal treatment to rival price-comparison services, a binding order from the European Commission said yesterday.

It is up to Google to choose how it does this and it must tell the EU within 60 days of its plans. Failure to comply brings a risk of fines of up to 5 percent of its daily revenue.

“Google’s strategy for its comparison-shopping service wasn’t just about attracting customers by making its product better than those of its rivals,” EU Commissioner for Competition Margrethe Vestager said. “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.”

Shares of California-based Google fell 1.5 percent in pre-market trading in New York. They have risen 23 percent so far this year.

Vestager’s decision marked the end of a lengthy seven-year probe fueled by complaints from small shopping Web sites, as well as bigger names, such as News Corp, Axel Springer SE and Microsoft Corp.

European politicians have called on the EU to sanction Google or even break it up, while US critics claim regulators are targeting the nation’s successful firms.

“I expect the commission now to swiftly conclude the other two ongoing investigations against Google,” German European Parliament lawmaker Markus Ferber said.

“Unfortunately, the Google case also illustrates that competition cases tend to drag on for far too long before they are eventually resolved,” he said. “In a fast-moving digital economy this means often enough that market abuse actually pays off and the abuser succeeds in eliminating the competition.”

Google has been pushing its own comparison shopping service since 2008, systematically giving it prominent placement when people search for an item, the EU said.

Rival comparison sites usually only appear on page four of search results, effectively denying them a massive audience, as the first page attracts 95 percent of all clicks.

“As a result of Google’s illegal practices, traffic to Google’s comparison-shopping service increased significantly, whilst rivals have suffered very substantial losses of traffic on a lasting basis,” the EU said, citing a 45 percent increase in traffic for Google’s service.

Yesterday’s fine could be just the first in a series of EU antitrust penalties for Google, which is fighting on at least two other fronts, including its Android mobile-phone software and the AdSense online advertising service.

The decision follows Russia’s US$7.8 million antitrust fine and penalties from Italian, German and French privacy authorities.

Europe has proved a tough jurisdiction for Google, which fell foul of the region’s top court, losing a high-profile right-to-be-forgotten case three years ago.

“Vestager is proving she means business,” said Thomas Vinje, a lawyer who represents FairSearch, a group of companies that complained to the EU. “This decision will mean that consumers receive comparison-shopping results that offer genuinely the best purchasing options.”

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