June 27, 2017

EU Fines Google $2.7B Over Search Engine Shenanigans

By the C|C Whistleblower Lawyer Team

The European Commission has fined Google 2.42 billion Euros (roughly $2.7 billion) for violating EU antitrust rules through abusing its dominant search engine to favor Google products over others. The company must now end the conduct within 90 days or face additional penalties of up to 5 percent of the average daily global revenue of Google’s parent company Alphabet. See EU Press Release.

According to the EU, Google has given prominent placement to its own comparison shopping service over those of such rivals as eBay and Amazon. Thus, when a consumer enters a query into the Google search engine, results connected to Google’s comparison shopping service are displayed at or near the top of the listing while results connected to rival comparison shopping services are demoted. The EU claims even the most highly ranked rival service appears on average only on page four of Google’s search results, giving Google’s comparison shopping service significantly more visibility to consumers in their online search efforts.

The EU found this conduct violated the EU antitrust rules through Google’s abuse of its dominant position in general internet search by stifling competition in comparison shopping markets. And it has “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.” By the EU’s calculations, this conduct has allowed Google’s comparison shopping service to increase its traffic 45-fold in the United Kingdom, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy. Traffic to rival comparison shopping services on the other hand has dropped significantly — 80 percent or more in the United Kingdom, Germany and France.

In announcing the fine, EU Competition Chief Margrethe Vestager came down on hard on what she views as Google’s illicit behavior and its harm to consumers.

Google has come up with many innovative products and services that have made a difference to our lives. 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. 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.

This may only be the beginning of Google’s search engine troubles as the EU acknowledged Google remains exposed to liability for civil actions from any person or business affected by its anticompetitive behavior. Indeed, the EU went out of its way to note in its press release that the new EU Antitrust Damages Directive makes it easier for victims of anticompetitive practices to obtain damages.

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