28 Jun 2017

Google fined record €2.42bn in EU ruling

6:50 am on 28 June 2017

EU antitrust regulators have hit Alphabet unit Google with a record €2.42 billion fine, taking a tough line in the first of three investigations into the company's dominance in searches and smartphones.

 The logo for US technology company and search engine Google is displayed on screens in London on February 11, 2016.

Photo: LEON NEAL AFP

It is the biggest fine the EU has ever imposed on a single company in an antitrust case, exceeding a €1.06bn sanction handed down to US chipmaker Intel in 2009.

The European Commission said the world's most popular internet search engine has 90 days to stop favouring its own shopping service or face a further penalty per day of up to 5 percent of Alphabet's average daily global turnover.

The fine, equivalent to 3 percent of Alphabet's turnover, is the biggest regulatory setback for Google, which settled with US enforcers in 2013 without a penalty after agreeing to change some of its search practices.

The EU competition enforcer has also charged Google with using its Android mobile operating system to crush rivals, a case that could potentially be the most damaging for the company, with the system used in most smartphones.

The company has also been accused of blocking rivals in online search advertising.

The commission found that Google, with a market share in searches of over 90 percent in most European countries, had systematically given prominent placement in searches to its own comparison shopping service and demoted those of rivals in search results.

"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," European Competition Commissioner Margrethe Vestager said in a statement.

Google said its data showed people preferred links taking them directly to products they wanted and not to websites where they would have to repeat their search.

"We respectfully disagree with the conclusions announced today. We will review the commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case," Google general counsel Kent Walker said in a statement.

The action follows a seven-year investigation prompted by scores of complaints from rivals such as US consumer review website Yelp, TripAdvisor, UK price comparison site Foundem, News Corp and lobbying group FairSearch.

The penalty payment for failure to comply would amount to around $US12 million a day based on Alphabet's 2016 turnover of $US90.3bn. The commission did not specify what changes Google had to make.

"This decision is a game-changer. The commission confirmed that consumers do not see what is most relevant for them on the world's most used search engine but rather what is best for Google," said Monique Goyens, director general of EU consumer group BEUC.

Thomas Vinje, legal counsel to FairSearch, welcomed the commission's findings and urged it to act on Google's Android mobile operating system following its 2013 complaint that Google restricted competition in software running on mobile devices.

- Reuters

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