Google incurs record $2.7bn fine in first anti-trust case

The European Union’s antitrust regulators on Tuesday hit Alphabet (GOOGL.O) unit Google with a record 2.42 billion euros ($2.7bn) fine, Reuters reported.

The commission took a tough line in the first of three investigations into the company’s dominance in searches and smartphones.

It is the biggest fine the EU has ever imposed on a single company in an anti-trust case, exceeding a 1.06 billion euro sanction handed down to U.S. chip maker, 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.

The penalty, it said, would be up to five per cent of Alphabet’s average daily global turnover.

The fine, equivalent to three per cent of Alphabet’s turnover, is the biggest regulatory setback for Google, which settled with U.S. 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.

The case 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 had a market share in searches of over 90 per cent in most European countries.

EU discovered that Google 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 anti-trust rules. It denied other companies the chance to compete on merit 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 want and not to websites where they have to repeat their search.

It stated that it would review the commission’s decision and consider appeal.

“We respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal.

“We look forward to continuing to make our case,” Google’s general counsel, Kent Walker, said.

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

The penalty payment for failure to comply would amount to around $12m a day, based on Alphabet’s 2016 turnover of $90.3bn.

The Commission did not specify what changes Google must 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.

He 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.



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