Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Google slapped with record US$2.7bn EU fine for abusing monopoly to promote shopping service

The European Commission has ruled that Google abused its power by unfairly promoting its own shopping comparison service ahead of rivals
google web page
The fine is the largest handed out by the regulator to a company accused of distorting the market

Google has been hit with a record US$2.7bn (£2.1bn) fine from the European Commission after a seven-year investigation found that the tech giant had abused its internet search monopoly.

The regulator said Google had broken EU law by exploiting its dominant position to promote its own shopping comparison service at the top of its search results pages, at the expense of its competitors.

The fine is believed to be the largest competition penalty dished out by the Commission, doubling the previous record handed to Intel back in 2009.

“[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 European Commissioner for Competition Margrethe Vestager.

On top of the money, Vestager also ordered Google to end its anti-competitive practices within 90 days, or risk having to pay out billions more in other fines.

The investigation dates back to the start of this decade but Google – which has always denied its practices unfairly stunted competition –  was only served with formal charges a couple of years ago.

You’ve likely seen Google Shopping results at the top of the page when searching for a particular product or item online.

It displays relevant images, prices, the name of shop and review scores if they’re available. These comparison lists are labelled as ‘sponsored’ reflecting the fact that only products paid for by the seller appear.

The EU found that since 2008, Google has “systematically” ranked its own price comparison service higher than its rivals, hence why it can always be found at the top of the first page of searches.

'All the makings of a brand disaster'

There's no doubt that Google and its parent company, Alphabet, can afford the fine given that the whole group is worth the best part of US$700bn with US$172bn of assets.

The true cost might run deeper than that though, with commentators suggesting the company's reputation could take a hit as a result of the ruling.

"Given the depth of Google's pockets, this is by no means a commercial disaster but it has the makings of a brand disaster,” said Rupert Bhatia of Rhizome Media.

"Google has always presented itself as ‘the good guy’ of technology, but if this fine stands then it would be harder for them to argue that.

"The record fine handed out to Google by the European Commission will be seen by many as a victory for e-commerce companies that operate in the shadow of giants.”

Alphabet shares fell 1.51% in afternoonb trade in New York on Tuesday to US$957.

--Updates for share price, tweet and additional info--

View full GOOG profile View Profile

Alphabet Timeline

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use