The European Union’s antitrust regulator on Tuesday fined Alphabet Inc.’s Google a record €2.42 billion ($2.71 billion) for favoring its own comparison-shopping service in search results and ordered the search giant to apply the same methods to rivals as its own when displaying their services.
The decision, if it is upheld, would force Google to reshape the way it presents search results for products in Europe, the latest move by Brussels to rein in the tech world. The decision could also have further-reaching implications for other Google products and services—as well as those from competitors.
If the ruling sets a precedent that holds, these firms might all have to rethink how they make products that—like Google’s search engine—have become more than just tools, but dominant gateways to the wider internet. Any changes the EU forces on Google’s business model “could eventually apply to any way that Amazon, Facebook or anyone else offers to search for products or services,” said Michael A. Carrier, a law professor at Rutgers University. “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,” said EU antitrust chief Margrethe Vestager. “What Google has done is illegal under EU antitrust rules.” Google general counsel Kent Walker said the company will review the decision and consider an appeal, adding that “we respectfully disagree with the conclusions announced today.”
At the heart of the case is what the EU believes is Google’s outsize control over traffic, both to its own and competing comparison-shopping websites. Merchants typically pay a small fee—either to Google or to its competitors—each time a user clicks through a search to the merchant’s site. Type in “gas grill” on google.com, and the first thing that appears is a set of ads—which merchants pay Google for—with links directly to the merchants’ sites. A user will also see results showing product pages from competing price-comparison websites. The EU says they routinely appear much lower, giving Google an unfair advantage. Google argues users prefer links that shuttle them directly to the site where they can buy the product, instead of going through another search website, like a comparison-shopping website.
In its decision, the EU detailed what it said were years of abuses, including demoting the results of rivals and artificially promoting its own shopping service above all other results. Those changes led to what the EU said was a 45-fold traffic increase in the U.K. and a 35-fold increase in Germany, with drops of traffic to rivals of 85% in the U.K. and 92% in Germany. In response, the EU more than doubled what had been the bloc’s previous record penalty for a company allegedly abusing its market position—a €1.06 billion fine on Intel Corp. in 2009. The EU also ordered Google to treat rival comparison-shopping services equally in its search results. Google has 90 days to end the conduct and explain how it will implement the decision, or face additional penalties of up to 5% of average daily global revenue, the EU said.