The European Commission issued a €2.4 billion fine to Google
The last fine to Google is only the tip of the iceberg
In 2010 the European Commission started a formal investigation against Google, for abuse of dominant position in the market of the Internet search. In 2014 the investigation speeded up when Margrethe Vestager became European Commissioner for Competition. Last week, the European Commission finally issued to Google a €2.42 billion ($2.74 billion) fine. Google is accused of having promoted its online shopping service, penalizing its competitors and, consequently, the consumers.
Within the EU, more than 90% of the searches online are made on Google Search. The dominant position itself is not against the law, but the European Commission saw several cases of abuse in the Google’s strategy and business.
They are already keeping an eye on Google with two other files:
- one related to Android, the mobile OS installed in the largest majority of mobile phones,
- and the other related to AdSense, the Google service through whom websites can host advertising managed by Google.
The European Commission’s position
According to the charges, the Commission accuses Google to have used its dominant position to promote its service, Google Shopping, putting it at the top of its search results.
“Google 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.” said Vestager.
The evidence show that “since the beginning of each abuse, Google’s comparison shopping service has increased its traffic 45-fold in the United Kingdom, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy”.
The fine has been calculated on the basis of the duration and the gravity of the infringement, which started in 2008 and was perpetrated in 13 Member States.
Google investigation in the US
Following the example of EU, also the Federal Trade Commission (FTC) started an investigation which was closed in 2013, after that Google agreed to follow the indications of the FTC. According to the FTC, “the introduction of Universal Search, as well as additional changes made to Google’s search algorithms — even those that may have had the effect of harming individual competitors — could be plausibly justified as innovations that improved Google’s product and the experience of its users. It therefore has chosen to close the investigation”.
Google has replied that their goal is to provide the best results to the users when they go shopping online. According to their studies, users prefer finding directly the product they are looking for, rather than being redirected to another price comparator. They also said that they have to compete with giants like Amazon and eBay, which are still the key actors in the field of shopping online.
“Given the evidence, we respectfully disagree with the conclusions announced today”, concluded Kent Walker announcing an appeal against the decision.
EU vs US
Google has now 90 days to comply with the requests of the Commission, otherwise, they will face a fine up to 5% of the global income of Alphabet Inc, which in 2016 was $90 billion.
But this fine is only the last addressed to the US tech giants. In the past, Microsoft was fined for similar reasons for the use of Internet Explorer and new challenges are on the table in the fields of data protection and taxes, and the EU will not keep it easy.