When even the global giants get fined…

The European Commission handed out its largest penalty to date at the end of June. The €2.42 billion fine was levied against Google for distorting the market, after the commission found that the company had promoted its own shopping comparison service at the top of search results which amounted to an abuse of power.

The ruling further stated that Google had 90 days to end its anti-competitive practices otherwise it would face a further penalty. This could amount to payments of 5% of the average daily worldwide earnings of Alphabet, the parent company of Google, a figure likely to be around $14 million per day. However, the commission has not specified what changes must be made to the Shopping service, allowing Google to determine what needs to be done.

Margrethe Vestager, the Competition Commissioner for the European Union, stated that Google “has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation”, declaring these practices illegal under the antitrust rules set down by the EU.

Moreover, Ms. Vestager has suggested this could be a landmark case in determining how related complaints about the way Google promotes its other services – such as maps, local business listings and flight price results – from within its own search tools. The penalty comes after a seven-year probe into Google’s dominance over both online searches and smartphones, which was initially triggered by complaints from a number of companies including one of Google’s main rivals, Microsoft.

Whilst the fine is the largest ever issued by the commission, Google is likely to be more worried about what the ruling might mean in terms of the impact on how it operates in the future. The company generates a considerable amount of advertising income from the way it prioritises its retail and commercial services. Any limitations imposed upon this could lead to significant financial losses for Google in the years ahead.