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Google to lose out on billions in shopping revenues every year following EU ruling

Analysts at Raymond James estimate that Google generates around US$4bn in revenues every year from its Google Shopping service in Europe, revenues which could soon come under threat

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Google has been ordered to pay a record fine and stop unfairly promoting its Shopping service

Google could miss out on billions in ad revenues every year from its Google Shopping service following yesterday’s ruling from EU regulators, according to analysts at US investment bank Raymond James.

The European Commission hit Google with a record US$2.7bn fine on Tuesday after it found the internet search giant had abused its dominant position to unfairly promote its own shopping comparison service at the expense of competitors.

On top of that, European Commissioner for Competition Margrethe Vestager  ordered Google to end its anti-competitive practices within 90 days, or risk having to pay out billions more in other fines.

That’s the longer-term issue, according to analyst Aaron Kessler. He estimates that Google Shopping generates revenues of between US$3.5bn and US$4bn in Europe every year.

Should Google make significant changes to the way it runs this service, Kessler believes that a large chunk of those revenues would likely disappear.

The analyst said it was “unclear” how Google would go about eliminating its anti-competitive bias in order to satisfy the EU’s demand, but he did come up with a few suggestions.

“We believe potential remedies could include: 1) increasing prominence of comparison shopping sites in organic results; 2) rotating which comparison shopping site is shown first (potentially moving Google Shopping results lower in the results); 3) shifting back to more text-based ads in these markets (vs. current Google Shopping ads),” Kessler wrote in a note to clients.

He also notes that Google is likely to face civil action from European competitors which have been impacted by its actions.

Shares in Google’s parent company Alphabet Inc (NASDAQ:GOOG) closed 2.6% lower yesterday, and they’ve dipped another 0.2% in pre-market trading this morning to US$926.20.

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