Google Suffers $2.7 Billion Antitrust Fine Under The Lens of EU Authorities
After a decade-long investigation by European Union by antitrust officials, there has been a ruling against Google who is being fined the equivalent of $2.7 billion US dollars, twice the next biggest penalty of its kind levied by the EU. While this fine is a mere 3% of Google’s annual revenue of $90 billion, there is some question as to the validity of the ruling, and how exactly the alleged damages are being calculate.
The specific case was focused on Google’s shopping service. EU antitrust chief Margrethe Vestager alleged that Google unfairly promoted their own shopping search results above competitors.
It’s going to be interesting to see how this plays out if Google decides to appeal, which it appears they will, having claimed no wrong doing thus far. Some other online retailers named in the investigation also seem to be doing just fine, as Amazon reported online sales of $94.7 billion — which is just 70% of their overall revenue of $136 billion. Even Apple, who’s online sales account for only 7% of their total revenue reported $16.8 billion from e-commerce.
One could argue a large portion of that revenue comes from Google’s display, shopping ads, search ads, and organic listings.
To claim that Google is unfairly monopolizing the market with their shopping feature is quite a stretch. It’s true that they command over 90% of search in Europe and Worldwide, but that market share is hard-earned, and based solely on day to day consumer preference for Google’s search engine accuracy. If consumers, for one moment, felt that their best interests were not being met, or their privacy were in jeopardy they could simply open up Yahoo, Bing, or any other search engine in their browser and use it. This is clearly not the same as the tangible marketshare in operating system technology owned by Microsoft, for example, who could never suffer the same type of overnight change in consumer demand.
However, if Google doesn’t pay up within 90 days, they’ll face a penalty of up to 5% of the average daily revenue of Alphabet, Google’s parent company. What the antitrust commission is really after though, besides the money of course, is Google to take a more responsible role in its position as market leader of search engines. The rest of the world currently debates that intent.
To say Google is secretive of their algorithms and inner workings is an understatement, even recently there’s been speculation over whether or not Google made an algorithm update this week. In the midst of this, many are calling for a third party to oversee the company’s European segment, a guard dog that would be privy to such sensitive intellectual property.
It doesn’t seem likely Google will agree to this degree of regulation. They’ll probably downgrade back to the practices they followed before the investigation started before giving away any of their secrets.
Meanwhile, Bill Gates rests easy, popcorn in hand, enjoying the show.
Joe Beccalori is a 20-year digital marketing veteran and industry thought leader, and is the CEO of Interact Marketing.