Google fined €2.4bn by European Commission for abusing internet search dominance

Company’s practices amount to an abuse of its dominant position in general internet search, stifling competition in comparison shopping, says European Commission

Google has been fined €2.42bn by the European Commission (EC) for breaching EU antitrust rules with its online comparison shopping service.

A Commission investigation looked at Google’s market position in general internet search since 2008, and found it to be dominant in every country in that time – except the Czech Republic, where it found Google to have been dominant since 2011.

The EC ruled that Google had abused this market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service. The ruling stated that Google had given prominent placement in search results only to its own comparison shopping service, while demoting rival services, thereby stifling competition.

“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing,” said Margrethe Vestager, EC commissioner in charge of competition policy. “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.”

The Commission said dominant companies had a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets. Otherwise, there would be a risk that a company, once dominant in one market, would be able to use this market power to further expand its dominance, or leverage it into separate markets.

The investigation found that Google had abused its market dominance in general internet search by giving a separate Google product (initially called “Froogle”, renamed “Google Product Search” in 2008 and “Google Shopping” in 2013) an illegal advantage in the separate comparison shopping market.

“Since the beginning of each abuse, Google’s comparison shopping service has increased its traffic 45-fold in the UK, 35-fold in Germany, 19-fold in France, 29-fold in The Netherlands, 17-fold in Spain and 14-fold in Italy,” said a statement from the EC.

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“Traffic to rival comparison shopping services, on the other hand, dropped significantly. For example, the Commission found specific evidence of sudden drops of traffic to certain rival websites of 85% in the UK, up to 92% in Germany and 80% in France. These sudden drops could also not be explained by other factors. Some competitors have adapted and managed to recover some traffic, but never in full.”

Google said it “respectfully disagrees” with the EC decision.

“While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches,” said Kent Walker, senior vice-president and general counsel at Google, in a blog post.

“When the Commission asks why some comparison websites have not done as well as others, we think it should consider the many sites that have grown in this period – including platforms like Amazon and eBay. As Amazon has grown, it’s natural that some comparison services have proven less popular than others. We compete with Amazon and other sites for shopping-related searches by showing ever more useful product information,” he added.

“When you use Google to search for products, we try to give you what you’re looking for. Our ability to do that well isn’t favouring ourselves, or any particular site or seller – it’s the result of hard work and constant innovation, based on user feedback.”

In addition to the €2.4bn fine, the EC requires Google to stop its illegal conduct within 90 days. Walker said Google would review the decision in detail and consider an appeal.

The Commission is separately investigating Google over the Android operating system and its AdSense search advertising tool, and has already come to the preliminary conclusion that Google has abused its dominant position in these areas, but investigations are ongoing.

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