Tuesday June 27, 2017
BRUSSELS — The European Union’s antitrust chief announced a record $2.7 billion fine against Google on Tuesday, saying that the powerful web-search leader illegally steered users toward its comparison shopping site and warning that other parts of Google’s business were in the crosshairs.
The fine is the largest the European Union has ever levied against a company for abusing its dominant position, and marked the latest confrontation over business practices between E.U. regulators and American tech giants. Google could face dizzying additional penalties if it loses an expected appeal and fails to comply.
If the ruling stands, it could reshape how the company presents search results in one of its most lucrative markets. The landmark decision sets up a major clash about whether government regulators can shape the behavior of one of the world’s most powerful companies.
“Google has abused its market dominance in its search engine by promoting its own shopping comparison service in its search results and demoting its competitors,” E.U. competition chief Margrethe Vestager told reporters in Brussels.
“What Google has done is illegal under E.U. antitrust rules. It has denied other companies the chance to compete on the merits and to innovate. And most importantly, it has denied European consumers the benefits of competition.”
The decision reinforced Vestager’s emerging role as the world’s most aggressive antitrust regulator, following on a $14.6 billion back-tax judgment against Apple last year.
The announcement caps a seven-year investigation into Google’s trade practices. Other related cases against Google are ongoing.
Google — which is considering an appeal — issued a statement minutes after the E.U. announcement, claiming the company’s shopping site helps both consumers and advertisers.
“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,” said Google senior vice president and general counsel Kent Walker in a statement.
“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,” he said. “We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”
Under European rules, it is up to Google to comply with the judgment, and Vestager offered no specific guidance about how it must modify its services.
The ruling was about how Google presents shopping results at the top of its search screen. The European Commission said that Google has been improperly channeling users toward its own Google Shopping comparison service rather than allowing rival services an equal chance at the results.
And as President Trump advocates a fierce America-first policy of trade protectionism, the ruling also raised questions of how his administration would respond to the broadside hit against one of the richest companies in the United States.
The answer was not immediately obvious. Trump has at times spoken of the need for aggressive antitrust regulation, and Google’s close ties to the White House under President Obama have been severed under the new political order. Several U.S. companies, including Yelp and Expedia, were official complainants in the European case against Google, dampening the Europe vs. America dynamic.
The E.U. antitrust chief said Google had illegally taken advantage of its juggernaut position in the world of search engines, pushing users toward its comparison shopping service and advertisers over those of rivals.
In April, Google CEO Sundar Pichai said shopping inquires had increased 45 percent in the past year.
“Our investments in innovative ad formats, improved targeting and better measurement are really helping retailers, who see us as an ally in their corner,” Pichai told investors while discussing the first-quarter earnings of parent company Alphabet Inc.
Last month, Facebook agreed to pay $122 million in fines to the European Union over charges that it misled regulators during its 2014 acquisition of WhatsApp. The fine was among the largest the company has had to pay to any government.
European regulators claimed Facebook was not honest about its ability to identify users who had both Facebook and WhatsApp accounts and link those accounts. At the time of the merger review, regulators were particularly concerned that WhatsApp users would have their information shared with Facebook without their consent.