Google appeals EU antitrust fine worth nearly 3 billion

This summer, the European Commission handed down a fine of 2.73 billion dollars to Google for "anti-competitive behavior relating to the operation of its product search comparison service, currently known as Google Shopping." According to Reuters "In June the EC judged that Google had given the service “an illegal advantage by abusing its dominance in general Internet search” — accusing it of promoting Google Shopping in organic search results while simultaneously demoting rival services — issuing a record-breaking €2.42 billion (~$2.73BN) fine for the antitrust violations." Google is appealing and hoping to overturn the decision, hoping to use a completely different anti-trust case brought against Intel in 2009 as precedent. In that particular case, Intel was cited for "abusing its No.1 position in the market for computer chips," which fined them 1.6 billion. However, "The European Court of Justice (ECJ) has now ruled that the case should be sent back to a lower court to be re-examined." The EJC's decision criticized "judges for failing to properly analyze the economic aspects of the case in its 2014 decision to reject the chipmaker’s challenge." While the two cases are completely different, Google may be hoping to the Intel decision will buy some time while they build another argument. Then again, as TechCrunch points out earlier last month, Google took some steps to comply with the EC Antitrust order regarding Google Shopping, One has to wonder, why would they take such steps if there's a solid argument to be made that they aren't in violation of antitrust rules. There's a simple breakdown from the European Commission's website that explains how they reached the decision. Here's part of it:

Google's practices amount to an abuse of Google's dominant position in general internet search by stifling competition in comparison shopping markets. Market dominance is, as such, not illegal under EU antitrust rules. However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets. Today's Decision concludes that Google is dominant in general internet search markets throughout the European Economic Area (EEA), i.e. in all 31 EEA countries. It found Google to have been dominant in general internet search markets in all EEA countries since 2008, except in the Czech Republic where the Decision has established dominance since 2011. This assessment is based on the fact that Google's search engine has held very high market shares in all EEA countries, exceeding 90% in most. It has done so consistently since at least 2008, which is the period investigated by the Commission. There are also high barriers to entry in these markets, in part because of network effects: the more consumers use a search engine, the more attractive it becomes to advertisers. The profits generated can then be used to attract even more consumers. Similarly, the data a search engine gathers about consumers can in turn be used to improve results. Google has abused this market dominance by giving its own comparison shopping service an illegal advantage. It gave prominent placement in its search results only to its own comparison shopping service, whilst demoting rival services. It stifled competition on the merits in comparison shopping markets.

By the way this isn't the only case the European Commission has against the Don't Be Evil company. According to the European Commission press release there are two other cases, one involving AdSense.

The Commission has already come to the preliminary conclusion that Google has abused a dominant position in two other cases, which are still being investigated. These concern: 1) the Android operating system, where the Commission is concerned that Google has stifled choice and innovation in a range of mobile apps and services by pursuing an overall strategy on mobile devices to protect and expand its dominant position in general internet search; and 2) AdSense, where the Commission is concerned that Google has reduced choice by preventing third-party websites from sourcing search ads from Google's competitors. The Commission also continues to examine Google's treatment in its search results of other specialised Google search services. Today's Decision is a precedent which establishes the framework for the assessment of the legality of this type of conduct. At the same time, it does not replace the need for a case-specific analysis to account for the specific characteristics of each market.

While the AdSense case is the most relevant to those in the advertising industry, all of the cases paint a picture of Google that is far from its stated mantra not to be evil. It's too early to tell if the fine will indeed be upheld. Intel is still fighting its judgment and that was nine years ago. But the longer it drags on the greater the chance that Google's brand image might take a hit. And if they become associated with having to pay a fine close to three billion, there might not be a charming enough Google doodle to fix their brand perception, at least in the EU.

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