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Europe Hits Google With Massive $2.7 Billion Fine

Variety logo Variety 6/27/2017 Stewart Clarke
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European authorities have hit Google with a huge €2.42 billion fine for breaching their antitrust rules. The tech giant immediately said it “respectfully disagreed” with the European Commission’s findings and is considering an appeal.

The Commission ruled, after a lengthy investigation, that Google abused its market dominance by favoring its shopping service in searches. Google has 90 days to amend its searches before penalty payments kick in.

“What Google has done is illegal under EU antitrust rules,” said Commissioner Margrethe Vestager, who is in charge of competition policy. “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.”

Google defended itself in a statement. “When you shop online, you want to find the products you’re looking for quickly and easily,” it said. “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.”

The Commission claimed that Google has systematically favored its comparison services over those of its rivals and that the Google Shopping service, previously called Froogle and Google Product Search, was more visible than rival services, which were demoted in its rankings.

“Google has come up with many innovative products and services that have made a difference to our lives,” Vestager said. “That’s a good thing. But 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.”

The Commission said that “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.” Traffic to the Google comparison site in the U.K. has increased 45-fold, by 35-fold in Germany and 29-fold in the Netherlands, according to findings of the the E.U. authorities.

In a blog post entitled ‘the other side of the story,’ Kent Walker, Google’s general counsel, said its comparison service allowed retailers to compete with eBay and Amazon. “Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users,” he said. “And we show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay.”

The ruling follows two other E.U. investigations into Google, which concluded, on a preliminary basis that Google abused a dominant position. The first case involved the Android operating system and the second the AdSense advertising platform. French authorities have also raided Google’s local offices in a tax probe.

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