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Google faces $2.7B fine for skewing search results for shoppers

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The fine from the European Union is twice as big as predicted and there could be more to come for the search giant as EU regulators look into Android.

The European Union just served notice that it will not go easy on Google.

EU regulators on Tuesday slapped Google with a 2.42 billion euro ($2.72 billion) fine for favoring its own shopping services in its search results over those of rivals.

“What Google has done is illegal under EU antitrust rules,” said EU Competition Commissioner Margrethe Vestager in a statement. “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.”

The fine is the biggest antitrust penalty the EU has ever applied to a single company, exceeding the $1 billion fine handed to Intel in 2009. It also far exceeds the $1.2 billion estimate that experts watching the Google case predicted.

Tuesday’s action against Google is yet another dustup in a series of confrontations between European bureaucrats and Silicon Valley giants. The EU, for instance, has been pushing Facebook, Twitter and others to do more to fight hate speech and terrorist activities on social media. Ireland, meanwhile, has squared off against Apple over tax payments.

In addition to being a huge regulatory setback for Google, the new ruling suggests the EU won’t cut Google any slack — bad news, given its ongoing investigations into Android and search advertising.

In the Android case, the EU is investigating whether Google may be crushing its rivals in the apps and services market by insisting Google services be preinstalled on all phones running Android. The company has also been accused of blocking rivals in online search advertising. Both cases could potentially result in further fines for Google.

The Android case could conclude within the coming months, but there’s no word yet on the advertising case.

The new $2.7 billion fine comes as a result of a seven-year investigation by the EU into whether Google was giving priority to its own needs over the needs of European shoppers. The Competition Commission has found that the internet giant systematically abuses its dominance in search to promote its own shopping services. European regulators also found that Google actively demotes rivals in its results through use of algorithms, making them less visible to consumers.

If Google does not stop this practice within 90 days, its parent company, Alphabet, will be charged a further 5 percent of its average daily global revenue in additional fines, Europe’s Competition Commission said in a press conference livestreamed on Facebook.

Google defended its approach to presenting search results, saying it disagrees with the EU’s decision and will consider an appeal after it reviews the details.

“When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products,” Kent Walker, Google’s general counsel, said in a statement. “That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.”

The Information Technology and Innovation Foundation, a tech policy think tank, called the EU ruling a bad deal for consumers, who, it said, had benefited from Google’s product comparison tool.

“The decision in this case shows the fundamental problem with the EU’s approach to antitrust issues: It is willing to take heavy-handed actions to protect competitors, at the expense of consumers,” ITIF President Robert D. Atkinson said in a statement. “The only real beneficiary of today’s ruling is the EU’s treasury.”

Google’s fines are to be paid straight into the EU budget, helping to finance the European Union and reduce the tax burden on individuals in member states.

C|net

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