European Union hits Google with a record-breaking $2.7 billion fine

Jun 30, 2017, 00:28
European Union hits Google with a record-breaking $2.7 billion fine

The ground-breaking ruling comes after a seven year competition probe of the company.

The release said that the Commission found during its investigations that the search engine had, ' systematically given prominent placement in searches to its own comparison shopping service', while demoting those of its rivals in the search results.

Regulators concluded that Google had abused its market dominance as a search engine to "give illegal advantage" to its shopping service.

Google will now have 90 days to make changes to how it promotes the Shopping service, or face further fines that could reach 5% of its daily worldwide earnings. Google chose to give preference to Google Shopping offerings in search engine results to gain traction with customers. But added that the company also "abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors".

Vestager said Google's competitors could claim compensation in national courts within the EU. Kent Walker, senior vice president and general counsel at Google, said in a statement that Google disagrees with the Commission's decision, and he argued that Google's search practices are aimed at providing users with the best experience rather than pushing them to Google's services.

"We think our current shopping results are useful and are a much-improved version of the text-only ads we showed a decade ago".

French drugs giant Servier, Teva and five other drug companies were fined €427.7 million in July 2014 for colluding to delay the introduction of a generic version of perindopril, a popular blood pressure treatment. Following a seven-year investigation, the European Union determined that Google abused its dominant market position to promote its own comparison shopping results while actively suppressing the competition.

Vestager said the case is likely to stay on her desk "for quite some time" as regulators monitor how Google deals with the order "for a number of years".

While the fine specifically relates to Google Shopping, it is understood that the Commission is looking at all of Google's vertical products, which clearly brings Google Flights and Google Hotels into the firing line.

Speaking of this accusation, the company was found to use its Android system to suppress rivals, a case which would cause a lot of damage to the company, with its operating system used in smartphones. It also said Google "has weakened or even marginalized competition from its closest rivals". If the European Union sticks to its guns, though, the company is in for a somewhat awkward situation; satisfactorily altering the way it handles shopping searches is likely to expose public information about its search algorithms to the public, a nightmare scenario for some of the company's most closely guarded tech. At issue here is how search results are presented.

Earlier, EU imposed antitrust penalty of Dollars 1.2 billion on Intel in 2009.

"Following the demotions applied by Google, traffic to rival comparison shopping services on the other hand dropped significantly", the European Commission wrote in a statement.

Her move against Google risks attracting further criticism that she's unfairly singled out USA companies.

The technology company has not yet indicated whether it will appeal the decision, because it wants to examine the European Commission's decision first.