The Cable

Google Hit With EU Record $2.7 Billion Fine

The company says European regulators underestimate the benefits Google brings small merchants.

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In the biggest antitrust case in more than a decade, the European Union slammed Google with a record 2.4 billion euro ($2.7 billion) fine on Tuesday and set the stage for further investigations into the California-based internet giant’s market dominance.

Competition authorities in Europe say that Google tweaked its search results to boost its own comparison shopping service and downgrade that of competitors.

Google “has promoted its own service, and demoted rival services. It has harmed competition and consumers,” EU Competition Commissioner Margrethe Vestager said. She later said the size of the fine was a reflection of the scope and duration of Google’s practices.

“We find that this abuse has taken place since 2008, but also that it has taken place in every European country where Google Shopping has rolled out…. and that’s reflected in the level of the fine,” she said.

Right now, if a user types in the name of a product — say “baby doll” — the first result on the search page is “Shop for ‘baby doll’ on Google.” European regulators found this illegal because Google is paid to put specific links at the top of the page.

Google said it will study the ruling and is considering an appeal, and argues that the shopping comparison service helps small companies compete with giants.

“Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay,” Google senior vice president and general counsel Kent Walker wrote in Google’s published defense of its actions. He called Amazon a “formidable competitor” in the comparison shopping space.

Google has 90 days to amend its practices in Europe. In the United States, the Federal Trade Commission ended a similar investigation against Google in 2013 after Google altered some of its business practices.

EU regulators have been criticized by American politicians for targeting U.S. companies in the past. In recent years, the European Union has demanded that Apple repay $14.5 billion in back taxes in Ireland, started an investigation into Amazon’s tax practices in Europe, and have sounded the alarm about Facebook’s data collection practices.

“Today’s decision shows that in Europe, companies must compete on their merits,” Vestager said, “whether they’re European or not.”

She further hinted that the Commission could be looking into other products where Google has a dominant position, such as maps and travel searches, calling Monday’s a “precedent” for further inquiries.

Photo credit: EMMANUEL DUNAND/Getty Images

David Francis was a senior reporter for Foreign Policy, where he covered international finance. @davidcfrancis

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