Why Is Google Being Fined?
Following a seven-year investigation, Google has been given a huge €2.42bn (£2.14bn) fine by the European Union for ‘illegally’ manipulating search engine results to favour its own shopping comparison services over others.
This is the largest verdict ever brought by the EU’s antitrust division on a technology company, beating the €1bn fine given to Intel in 2009.
EU Commissioner Margrethe Vestager said: “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.”
Google now has 90 days from the date of the verdict to change the way in which it operates these searches or risk further daily fines of up to five per cent of the turnover of its parent company, Alphabet. Part of this will involve implementing a change to the way in which the company’s algorithms rank websites, which gave Google’s price comparison sites preference and denied its rival competitors of traffic. The EU’s decision was taken to allow an increase in market competition and limit Google’s practice of neglecting to show results from other providers, such as Amazon.
The record-breaking penalty is indicative of the tough stance the EU is now taking in regulating technology companies, showing that there is zero tolerance for illegal activities; however, this could cause tensions, with the United States accusing Brussels and the EU of ‘anti-American bias’.
For now, this verdict and its implications will only apply to how Google operates in Europe; however, other regulators could soon jump on board and force Google to change the way in which it operates in other markets.
Google is an American multinational company, with its headquarters in California. It was founded in 1996 by Larry Page and Sergey Brin as a university research project, investigating the way in which pages were ranked in search engines and trying to find a more effective way by analysing the relevance, number and importance of web pages. The company now specialises in internet-related services, including search services, cloud storage, mapping and social networking. In 2015 alone, Google reported $75bn (£58bn) in revenue.
Whilst the fine is unlikely to cause a huge hole in Google or Alphabet’s finances, the tough verdict may be just the start of worrying times for Google. The EU is continuing to investigate other areas of the company, particularly its mapping and imaging systems. The verdict also opens the door for Google’s rivals to claim compensation and the company may find itself faced with civil actions brought by any company that deems the actions to have caused an unfair disadvantage.
Google has ‘respectfully disagreed’ with the verdict and now has the option to thoroughly review the case before deciding whether to appeal.