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Google Hit With Record Fine By European Commission

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Google have today been hit with a huge fine of 2.42 billion euros by the European Commission after it ruled that the company had abused its power by promoting its own shopping comparison service at the expense of others at the top of search results. Accusing Google of distorting the market, it is the regulators largest penalty to date and the ruling also ordered Google to end its anti-competitive practices or face a further financial penalty.

The fine is the culmination of a seven year investigation of Google by the European Commission who were spurred on by complaints by competitors of Google including Microsoft. Announcing the record fine today, commissioner Margrethe Vestager, who is in charge of competition policy said:

“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.”

Industry commentators have said that the fine is a serious setback for Google. One of these, Oliver Fairhurst, associate and competition law specialist at law firm Lewis Silkin said:

“The decision is a real kicking for Google. The fine is around double the amount of the previous largest fine issued by the commission, showing how seriously the behaviour is viewed. One major caveat to all this though is that Google is very likely to appeal, and any such appeal process may take us well into the 2020s.

This very well may be the case as in a statement by a spokesperson from Google, it does look like they may appeal the ruling from the European Commission.

“When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both. We respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

Even if it does appeal though, the company will have to change the way it operates in the short-term as failure to do so could see it forced to make payments of 5% of its parent company Alphabet’s daily worldwide earnings. According to recent financial reports that would come to a staggering $14 million per day.

 

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Scott Bretton

Scott Bretton

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