June 28, 2017
The European Union’s competition watchdog fined Google a record $2.72 billion Tuesday for breaching antitrust rules with its online shopping service.
The announcement marks the latest clash between European regulators and large U.S. technology companies, including Apple and Amazon, which have been ensnared in lengthy European antitrust, tax and privacy-related investigations.
Regulators said Google “abused its market dominance as a search engine by giving an illegal advantage to another Google product.”
The European Commission said the firm “gave prominent placement in its search results only to its own comparison-shopping service, whilst demoting rival services. It stifled competition on the merits in comparison-shopping markets.”
The commission, which oversees EU competition rules, gave the Mountain View, Calif., company 90 days to stop or face fines of up to 5% of the average daily worldwide turnover of parent company Alphabet.
Last year, Alphabet had a turnover, or annual sales, of just over $90 billion, meaning the additional daily fine would amount to about $12.3 million a day.
Google has repeatedly denied any wrongdoing. Kent Walker, a senior vice president for the firm, said it would review the commission’s findings and might appeal.
“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,” he said. “That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.”
Google’s share price fell 2.5% to $948.09 on Tuesday, with losses buffered by investor expectations that the EU was preparing a fine.
The fine follows a seven-year investigation by EU regulators and is the largest ever handed out by the commission.
European regulators have two other antitrust cases against Google outstanding. One is related to the dominance of its Android mobile operating system and the other concerns its search advertising platform.
It also represents a stark contrast to the United States, where large technology firms are often seen as innovators, job creators and do not attract the same suspicion as they do in Europe, according to legal experts.
Jan Oster, a professor of EU law and institutions at the University of Leiden in the Netherlands, said the approach toward regulation in Europe is much more “paternalistic and less laissez-faire than in the U.S.”
He said the EU perceives markets and consumers as requiring more protections than in the United States, where the broader legal environment has different interpretations of competition, free speech, privacy and tax standards. He said the EU’s case against Google and other U.S. firms was unlikely to be replicated at home in any form.
The commission fined Silicon Valley chipmaker Intel $1.2 billion in 2009 for anti-competitive practices. Apple was hit by a $14 billion tax bill last year after the European Union concluded Ireland provided the firm with improper tax benefits.
Original headline: Google fined record-setting $2.72 billion over EU rules; Search giant has 90 days to change its online shopping service; company says it may appeal
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