The European Commission has fined Google €2.42 billion for breaching EU antitrust rules. Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
The company must now end the conduct within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.
The two core offences as noted by the European Comission are as follows:
From 2008, Google began to implement in European markets a fundamental change in strategy to push its comparison shopping service. This strategy relied on Google’s dominance in general internet search, instead of competition on the merits in comparison shopping markets:
- Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google’s comparison shopping service wants to show results, these are displayed at or near the top of the search results.
- Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google’s search results on the basis of Google’s generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted. Evidence shows that even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions.
As a result, Google’s comparison shopping service is much more visible to consumers in Google’s search results, whilst rival comparison shopping services are much less visible.
Much like Apple’s and Ireland’s illegal tax deal, fines like this can be easily avoided: respect the laws regarding doing business in the EU. I don’t expect the current (or the previous, for that matter) US administration to keep these incredibly powerful tech giants in check, so I guess it’s up to the EU.
Queue the complaints from Americans that the EU is “targeting American companies”.
Anyway, I’m in two minds about this. On one hand, having shopping links show up when I search for some potentially obscure item is useful to me. On the other, it isn’t always very clear which are the sponsored sellers; Google have generally been getting worse at clearly indicating sponsored content over the past few years.
Finally on the gripping hand, there’s no way this is worth the fine being imposed: Amazon & eBay very clearly have a far larger market than anything Google has achieved with Shopping, and I can’t believe it’s had a large negative impact on smaller sellers beyond anything Amazon will have already done.
Amazon doesn’t have much of a presence in the EU, though – it’s a mere shadow of its presence in the US.
Depends on the EU Country. It’s a non-entity in the Netherlands but in the UK it’s huge, with 1-hour Prime available in most major cities.
I’m going to miss having Prime when I move to NL…
I have some news for you…
The UK is still an EU country up to and possibly beyond March 31, 2019. Amazon had a turnover in excess of £6bn in the UK last year.
It is now enshrined in law that the UK will leave the European Union on that date.
http://www.theirishworld.com/brexit-now-uk-law/
Not at all. The Brexit Bill (“European Union (Notification of Withdrawal) Act 2017”) just allowed the Government to notify the EU of its intent to withdraw under the terms of Article 50. The Act in no way mentions any timescales and Article 50 allows the process to take longer than 2 years (within certain constraints)
You can read the full Act here http://www.legislation.gov.uk/ukpga/2017/9/introduction/enacted if you like. It should take you less than 30 seconds.
Funny you forgot to mention that the timebomb is in the Article 50, not the UK Act… http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-Europe…
I didn’t forget it at all. Article 50 allows the 2 year period to be extended under certain constraints, which is precisely what I said.
You make it sound like it is a UK decision to withdraw or not from the EU on March, 31 2019… I’m afraid that’s not the case, the remaining EU members *could* extend this period. UK has no say and could be de facto out of EU on March, 31 2019. Hence I’m saying that Article 50 embeds a 2-year timebomb, which is the only timescale known at this time…
Right; the 2 year period can be extended, under certain circumstances. You don’t need to keep restating that simple fact as though it’s a new concept.
America first, don’t know?
This monstrosity should have been killed ages ago. However, even a blind hen manages to eat…..
* the EU and * google.
Google shopping is a minor piece of Google. Personally I never use it. I doubt that Google has anywhere near 2.42EUR revenue from this product and certainly not 2.42EUR in profits from it. It is really messed up when the fine can take all of your profits from an area plus even more on top of that.
I suspect if Google was offered the deal to simply drop the Google shopping product in exchange for dropping the suit, I believe they’d just get rid of the product.
On top of this the complaint misses the mark, the dangerous, potential monopolies are from Amazon and Alibaba, not Google shopping.
The monopoly complaint is not about Google shopping but about Google search abusing it’s monopoly to promote Google shopping.
Quick anticompetitive summary: Having a monopoly is fine, but using that monopoly to get ahead in another area is abuse.
Your understanding of EU competition law is quite poor.
If indeed the fine would be so badly off target as you claim, first of all the EU Commission services would never have imposed it because they CAN do basic math and secondly, Google would immediately appeal to the (EU)Court (of First Instance) which it probably will do on the merits anyway.
The fine the commission can impose for an infringement of EU competition law is capped to 10% of yearly turn-over.
Moreover, until such time as the US gets rid of the ridiculous system of “punitive damages” which as a rule far outstrip compensatory damages for damages actually incurred, no US citizen is in a position to comment on EU competition law enforcement.
The only reason why these fines are so high for American companies is because your competition authorities are ineffective, have total disregard for companies building dominant positions as long as it benefits the consumer whilst EU competition law tries to safeguard the market mechanism by itself because in the end when you end up with a dominant player, quasi monopoly or even oligopoly, this undermines the very foundations of the “free market”. Most Americans have forgotten that capitalism has to be kept in check for the fundamental market mechanism to continue to function and maintain competition within the market so as to ensure the best pricing and products for consumers. The alternative is behemoths like Facebook which will impose whatever conditions it wants on you unless you decide not to use its service.
Now if they would do something about Google changing the TOS every now and then. I can always use a new search engine, moving my entire email inbox to a different service and finding every person I have given my email address to give them the new one… nah…
Then there is also the issue of Google buying credit card transaction data from banks without the cardholder’s consent.
Edited 2017-06-27 13:08 UTC
kurkosdr,
Yeah, I linked to it recently:
http://www.osnews.com/comments/29831
Edited 2017-06-27 13:57 UTC
People could have not used Google…
People like using Google for search. That gave Google a lot of power. Google abused that power. People didn’t do anything wrong, Google did.
You can try to change the behavior of billions of people, or you can rightfully fine one company that oversteps the boundaries with the side affect of some people changing their behavior
Google did not abuse that power. They took advantage, which is a different thing. EU-bolsheviks hate de facto monopolies, so Google is being bullied for using its own services.
Other companies are not entitled to use Googles services, seeing it is a private and not a public service.
According to EU law, they did.
From the 1890s until 1980 (Ronald Reagan) the US also had a policy of aggressively breaking up monopolies.
If I was Google, I would just claim that I was no longer a search engine, but an advertising engine that also happened to return useful search results.
That way, if the EU asks me to include competitors results, I would just say, well, google.com is an advertising site. We only guarantee that you will show up there if you pay for it. Other links are included on our goodwill. And we are not in the business of promoting our competitors with free advertising.
Maybe Google should pull out of the EU and block all their services from the EU.
Also it’s not like Google is the only search engine, there are others.People CHOOSE to use google when they could use many others like Bing, duckduckgo, etc.
Google may have an monopoly only cause people choose to keep using them.
Why should a company get punished cause they have the best product and others can’t create a better product?
And when there are alternatives and people CHOOSE not to use them how is it the companies fault? Should google start having an option for people to use Bing’s engine?
Should McDonald’s be forced to sell Whoppers?
Should Walmart sell stuff for Amazon or vice versa?
Edited 2017-06-27 16:34 UTC
supergear,
I think your missing the point, there’s no indication that google’s shopping service is “the best product and others can’t create a better product”. What’s happening is that google is using it’s search monopoly to promote it’s out shopping service and displacing others that might well be better than google’s.
This is one of the primary impediments I see for small businesses, no matter how good they make their service, it remains very difficult to compete with the bigger brands.
Hi,
Why should a company that has the best “shopping services” be punished, simply because some massive fat greedy evil company abuses a monopoly in “search” to unfairly coerce consumers into using an inferior “shopping services” product?
– Brendan
American companies like Google (Amazon, Facebook, Twitter, Uber etc) aren’t the “best”. They rely on venture capitalists to support their loss making operations for many years while they build a dominant market position. They also lobby politicians to protect their anti-competitive businesses.
Edited 2017-06-28 09:11 UTC
Other companies would simply fill the void.
China seems to cope very well without any Google services.
That is an obscenely huge fine. Assuming that Google pays that amount, I can’t help but wonder where that money goes… (Not being in the EU, I have no clue).
Who benefits from the fines? Are these types of fines used in some way to compensate the consumer or Google’s competitors who supposedly were harmed by Google’s practices? Or does it end up in the pocketbooks of politicians? Not trying to cast any stones, just genuinely curious if that kind of money trading hands is handled entirely above board.
The fines are handled in a rather clever way: the amount is deducted from the EU budget, so that member states pay less in accordance with all the existing frameworks for who contributes what amount.
Hi,
It’s a shame that none of it will go towards compensating victims (companies/businesses/people that tried to provide competing shopping services). A victim compensation scheme would go a long way to show that the fine was motivated by fair competition (and wasn’t just an excuse to improve Government budgets).
– Brendan
They can sue google for damages themselves. A fine isn’t for compensating damages, it should hurt in addition to the liability for damages. And I think most European law systems don’t know the concept of punitive damages. Without punitive fines there would be no financial risk in violating the law. If caught the worst which can happen to you is having to give back your illegal profits. You couldn’t lose.
That is actually wrong: there is EU directive in place which is being transposed in the national legislation of all EU member states that allow “class action” style court action to recover damages incurred by e.g. consumers who were the victim of say, a price fixing cartel or an abuse of dominant position. The main hurdle until now was that the amount per consumer is usually pretty limited so not worth to file for in court to get compensation. Hence the need for collective redress to strip the companies from their benefits acquired by infringing competition law. There are exceptions of course the infamous lift/elevator cartel probably was able to overcharge a substantial amount per lift/elevator. Even the EU commission itself fell victim to it and started an action in Belgian court to recover damages. Ill gotten gains …