The European Commission has fined Google €2.42 billion (£2.1 billion) for breaching EU antitrust rules.
In an official statement, commissioner Margrethe Vestager claims that Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
"Google has come up with many innovative products and services that have made a difference to our lives," she explained. "That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals.
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"Instead, 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. What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."
The company must now end the conduct within 90 days or face penalty payments of up to 5 per cent of the average daily worldwide turnover of Alphabet, Google's parent company. The European Commission has the power to fine Google up to 10 per cent of its total yearly sales.
****: According to the European Commission's official statement, Google's illegal practices have had a significant impact on competition between Google's own comparison shopping service and rival services. In particular, they allowed Google's comparison shopping service "to make significant gains in traffic at the expense of its rivals and to the detriment of European consumers".
****: The statement continues that given Google's dominance in general internet search, its search engine is an important source of traffic. "As a result of Google's illegal practices, traffic to Google's comparison shopping service increased significantly, whilst rivals have suffered very substantial losses of traffic on a lasting basis".
****: During the period under investigation, Google's comparison shopping service has increased its traffic 45-fold in the UK, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy.
****: Meanwhile, traffic to rival comparison shopping services is said to have dropped significantly. The Commission says it has found specific evidence of sudden drops of traffic to certain rival websites of 85 per cent in the United Kingdom, up to 92 per cent in Germany and 80 per cent in France. It adds that these sudden drops cannot be explained by other factors.
****: In combination with the Commission's other findings, this shows that Google's practices have stifled competition on the merits in comparison shopping markets, depriving European consumers of genuine choice and innovation.
Before the announcement was made, analysts predicted the fine would be in the region of €1.1 billion to align with the previous largest monopoly case brought against Intel, which saw the company fined €1.06 billion (£932 million) in 2008.
Google has repeatedly denied any wrongdoing. Read more: Loopholes and luxuries: how Apple, Facebook and Google stay ahead of the tax man
According to the EU's factsheet, Google's rights of defence were "respected throughout the Commission's investigation". It explains that Google also had the right to a hearing before the Commission services and the competition authorities of the Member States, which it chose not to do.
The Commission is additionally investigating Google in two other cases of abuse. One relates to Google's androids operating system - the Commission says it is concerned Google has: "stifled choice and innovation in a range of mobiles apps and services by pursuing an overall strategy on mobiles devices to protect and expand its dominant position in general internet search." The other case claims Google has reduced choice in the advertising industry by preventing third-party websites from sourcing search ads from Google's competitors through its AdSense software.
"Today's decision is a precedent which establishes the framework for the assessment of the legality of this type of conduct," said the Commission. "At the same time, it does not replace the need for a case-specific analysis to account for the specific characteristics of each market."
Since Vestager took over as commissioner in 2014, she has targeted a number of tech giants including Apple. Following a European Commission investigation into Tim Cook's firm's tax practices, Vestager declared that “Apple's tax benefits in Ireland are illegal”, ruling that the firm had colluded with the Irish government to pay an effective tax rate of 0.05 per cent. The Commission ruled that Apple owed Ireland back taxes totalling €13 billion (£11bn), plus interest. Apple has since lodged a total of 14 'pleas' against the European Commission.
This article was originally published by WIRED UK
