Google Hit With $2.7 Billion Fine By European Commission For Giving Itself An 'Illegal' Shopping Service Advantage

Google, which dominates the worldwide search engine market, has been fined a whopping $2.7 billion by the European Commission (EC) for giving its own comparison shopping service an "illegal" advantage.

The European Union antitrust regulator said the Google practices amount to an "abuse of Google's dominant position in general internet search by stifling competition in comparison shopping markets."

The EC claimed that Google has systematically given prominent placement to its own comparison shopping service."At the same time, the European Commission said Google has "demoted rival comparison shopping services in its search results."

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The $2.7 billion fine is the largest ever imposed by the EC. Just two weeks ago, the Wall Street Journal and New York Times reported that the fine could exceed the $1.2 billion fine the EC leveled against Intel for in 2009 for alleged antitrust abuses.

The EC said Google has 90 days to stop the practice or face steep fines of up to five percent of the "average daily worldwide turnover" of Google's parent company, Alphabet.

"Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals," EC Commissioner Margrethe Vestager said in a prepared statement. "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."

The EC said Google's "generic search algorithms" favor the search engine giant over competitive shopping services. "Evidence shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down," said the commission. "Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions."

In a blog post, Google Senior Vice President and General Counsel Kent Walker said the EC decision "underestimates" the value of Google's ability to allow consumers to make "fast and easy" connections to products.

"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 Walker.

In fact, Walker said the current Google shopping results are a "useful and much improved version" of the text-only ads from a decade ago."Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users," said Walker. "And we show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay."

The alleged Google algorithm advantage has resulted in a boost to comparison shopping traffic to Google and a "very substantial" loss of traffic to competitors, according to the EC.

"Since the beginning of each abuse, Google's comparison shopping service has increased its traffic 45-fold in the United Kingdom, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy," said the EC.

The "demotions" applied to rival comparison shopping sites, meanwhile, resulted in what the EC called "sudden drops of traffic" to "certain rival websites of 85 percent in the United Kingdom, up to 92 percent in Germany and 80 percent in France. "

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech -- No. 119 on CRN's Solution Provider 500 -- said the EC ruling could affect e-tailers or direct marketers, but would not have an impact on solution providers serving enterprise customers.

"For enterprise solution providers, I see zero impact from this," he said. "This impacts the consumer. If a company is going to buy from Future Tech because of what they read on Google then I have not done my job as a VAR. Just like there is fake news, there is fake shopping and there is non-secure supply chain out there. As solution providers, we cannot play into that or worry about that. We need to shape our own destiny instead of relying on search engines to dictate what quality pricing and solutions should look like."