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Business Impact

Google Just Got Hit with a $2.7 Billion Antitrust Fine from the EU

Regulators say the search giant skewed its comparison-shopping results to stamp out competition.

The EU has slapped Google with a $2.7 billion fine for skewing the search results on its comparison-shopping service.

EU regulators say that the search system Google uses is modified to demote rival services. According to their evidence, it pushes competitor comparison services all the way down to the fourth page of results. Given that the first page of results gets 95 percent of clicks, that, says the EU, gives Google a “significant advantage compared to rivals.” And that is illegal under EU antitrust rules.

In a statement explaining the fine, Margrethe Vestager, the EU’s antitrust chief, explained that “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, she argued, it “denied other companies the chance to compete.”

According to the conditions of the fine, Google now has 90 days in which to cease these activities, and it must inform the EU of how it intends to do that inside 60 days. If it doesn’t, it faces further fines—of up to 5 percent of Alphabet’s (50 Smartest Companies 2017) average daily worldwide turnover.

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The fine itself may not be the hard part for Google to stomach. Alphabet, after all, has over $90 billion in cash. Instead, as the New York Times has noted, the search firm will be concerned about how far it must go to solve the problem. And its biggest fear would be a situation in which regulators force it to divulge the inner workings of its algorithms to prove that it is playing fair.

Expect Google, then, to fight the fine hard and do it all it can to keep its algorithms locked down. Indeed, the company has already issued a statement announcing that it will “respectfully disagree with the conclusions announced today,” adding that it plans to “review the commission’s decision in detail” and then “look forward to continuing to make [its] case.” Whatever happens after 90 days, the long-term outcome of all of this wrangling is likely to play out over the course of years, not months.

One point worth noting: the fine is a clear signal from Vestager that she is unafraid to challenge America’s biggest tech players when she suspects them of wrongdoing. Indeed, she also leveled a $14.5 billion tax fine on Apple just last year. She has said that U.S. companies are “under no specific fire because of their nationality” in the past, but these two huge fines may prompt some to believe that’s not quite the case.

At any rate, Google is far from out of the woods. There are still two more EU antitrust cases with Google’s name on them—one relating to its Android mobile operating system, the other to its advertising system, AdSense. Depending on how the cases go, those fines could really start racking up.

(Read more: European Commission, New York Times, “Apple’s Tax Game Is Hurting Economic Growth”)

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