Google Fined $2.7 Billion by EU for Violating its Antitrust Rules


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Google has been the go to by e-shoppers for years when they’re looking for stuff they cannot find usually in Amazon or E-bay. But since tech giants can’t operate from just ad revenue money they also have to come up with other money making schemes like revolutionizing the mobile phone business and going into healthcare tech and other bunch of tech-related or Internet-related businesses. However it seems that Google went too far this time and the European Union has to slap Google from its drunken state.

World Record Fine

Image Source: Pixel Central

Image Source: Pixel Central

So this week the European Union has fined Google a whopping amount of $2.7 billion for violating the Union’s antitrust rules. Official press release states that the company was accused of abusing the market as a search engine by providing advantage to another product of Google, giving them greater advantage against their rivals.

This is the biggest EU fine against a company in an antitrust case since 2009, where the EU was reported to have fined Intel a sum of more than $1 billion. At that time Intel was accused of abusing their dominance in the computer chip market. They were also found to be guilty of going into “great lengths to cover up its anti-competitive actions” and “harmed millions of European consumers” along the way to keep being the dominant company in the global computer chip market.

Back to the Google case, Commissioner Margrethe Vestager, who is in charge of the competition policy, gave a statement, saying that Google wasn’t just attracting the customers by making their products better compared to their rivals but they have also been promoting their own products in the search results while demoting those of their competitors.

What Google has done is illegal under EU antitrust rules,” she said. “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.

Comparison Shopping Service

Image Source: Google Shopping

Image Source: Google Shopping

The service in question is known as Comparison Shopping, which is defined as “the practice of comparing the price of products or services from different vendors before buying.” Online comparison shopping has been a thing even before Google came into the scene. At that point there were already established players in Europe. Google came into the European scene in 2004 with their first shopping service called Froggle, now known as Google Shopping. Created in 2002 by Craig Nevill-Manning, it allows people to do comparative shopping by gathering data of products from different websites. Initially the service runs on AdWords advertising, merchants just has to submit the info of their wares to the service. But in May 2012 they started requiring merchants to pay them in order for their products to get listed.

The charges against Google came from some of the strategies it started using with Google Shopping since 2008.

  • Google has systematically given prominent placement to its own comparison shopping service; and
  • Google has demoted rival comparison shopping services in its search results

This means that when a user enters a query to Google’s search engine, the products related to the query would come up first. At the same time related products of rival companies comes after Google’s due to the use of generic algorithm. Thus they only appear in page two and further.

This is clearly a demotion of rival companies and violates antitrust laws in the European Union. The law states that “dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets.” The decision concludes that Google is a dominant company, especially in tech, in the European Economic Area and has thus violated the law.