The European Commission (EC) has served Google a whopping €2.42bn (£2.15bn) fine for abusing its dominance as a search engine. Following a seven-year investigation, Margrethe Vestager, the EU's competition commissioner, has ruled that Google has given its own shopping channel "an illegal advantage" which "denied other companies the chance to compete" and left consumers without "genuine choice". The company has 90 days to make changes or parent company Alphabet (US:GOOGL) must hand over up to 5 per cent of its average daily worldwide revenue. It must also "refrain from any measure that has the same or an equivalent object or effect".
The problem lies in Google's shopping channel, which is promoted by the Google search engine. Like other price comparison websites (PCWs), Google Shopping makes money from retailers paying to promote their products. So by endorsing its own channel via its search engine (which is used by 95 per cent of Europeans), the EC has concluded that Google's site has an unfair advantage over other PCWs.
In the UK, Google's strategy has been felt particularly strongly by the likes of Moneysupermarket.com (MONY) and GoCompare.com (GOCO). Market watchers have also speculated that the challenges inflicted by Google could be one of the contributing factors to BGL - the owner of Comparethemarket.com - delaying its IPO.
And it is not just European companies that have welcomed the ruling. Google's big US technology peer, Microsoft (US:MSFT) - which also recently came under fire for abusing its market dominance - issued complaints against Google that spurred on the EC's investigation. Publisher News Corp said: "The abuse of algorithms by dominant digital platforms should be of concern to every country and company seeking a fair, competitive and creative society." For News Corp, the ruling is likely to be particularly prescient as publishers and advertisers have not been immune to the Google might. Some have speculated that the EC's ruling on PCWs could be the start of a bigger clampdown on other markets where Google has been deemed to have an unfair advantage.
But not all are in favour of the EC's ruling. Jeff Jarvis - author of What Would Google Do? - tweeted: "[It's] eurotechnopanic at its worst: anti-American, anti-technology, anti-capitalism." Google itself "respectfully disagrees" with the allegations and ruling. The group had previously suggested that online retailers Amazon (US:AMZN) and eBay (US:EBAY) have more influence over the public's spending habits and its shopping service merely acts to give consumers more choice.
