On 27 June 2017 the European Commission decided to impose an unprecedented EUR 2,42 billion fine on Google (Google Inc. and Alphabet Inc.) for an abuse of dominance by favouring its own shopping service/ads in internet searches (comparison shopping market). Previous EC record antitrust fine on a single company was EUR 1,06 billion for Intel in 2009. Google is required to comply with a principle of equal treatment – provide same treatment to rivals’s comparison shopping services and to its own.
Infringement in essence
Google was found abusing its dominant position by promoting its own comparison shopping service in its search results, and “demoting those of competitors.” In other words, Google’s ads enjoyed higher number of clicks as a result of better display/visibility – i.e. Google’s own services appeared at or near the top of the search results, while even the most highly ranked rivals’ services appeared on average only on page 4 or so of Google’s search results.
According to the European Commission, such practices significantly affected competition in the market for comparison shopping and allowed Google to make significant gains in traffic at the expense of its competitors and to the detriment of consumers.
On the one hand, Google was found violating EU competition law by favouring its own services over those of competitors by making Google’s results more visible. But on the other hand, consumers could still visit other sites/platform to compare prices before buying online.
Fine and further actions
- It is interesting that the fine was imposed after years of negotiating commitments, which normally happens in cases where the authority does not intend to impose a fine.
- Google will have 90 days to put an end to the infringement and change the way it has operated or may run into a risk of further daily penalty of up to 5% of daily global revenue of Alphabet, Google’s parent company.
- There may be civil actions for damages from the competitors that were excluded from the market as a result of Google’s practice.
- Google is also being investigated in relation to other two cases: Android operating system and AdSense (advertising issues).
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