A Bloomberg report from yesterday suggested Google could be hit with a record fine by the European Union's antitrust regulator over the company's alleged manipulation of search results. The regulator has now announced that it is levying a $2.7 billion fine on Google for abusing its dominance as a search engine by giving an "illegal advantage" to its own comparison shopping service.
The EU states that Google favored its own price comparison engine — Google Shopping — over rival services, thereby denying companies the ability to compete. From EU Commissioner Margrethe Vestager:
Google has come up with many innovative products and services that have made a difference to our lives. That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. 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.
What Google has done is illegal under EU antitrust rules. 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.
According to the ruling, Google's manipulation of search results has led to a significant decrease in traffic for rival comparison shopping services, amounting to as much as a 85% drop in countries like the UK. At the same time, the commission found that Google's own service picked up a 45-fold increase in traffic in the UK. As noted by the EU:
These sudden drops could also not be explained by other factors. Some competitors have adapted and managed to recover some traffic but never in full.
The EU said it decided to impose the fine after conducting a thorough investigation in which the commission reviewed documents from Google and "other market players," analyzed 1.7 billion search queries, pored through click-through rates along with financial and traffic data.
The EU commission is giving Google 90 days to stop its "illegal conduct" and tweak its search algorithm to favor rival services just as favorably as its own:
Google has to apply the same processes and methods to position and display rival comparison shopping services in Google's search results pages as it gives to its own comparison shopping service.
Failing to comply with the decision will allow the EU to fine Google up to 5% of its daily turnover. Given the impact of the EU's investigation and the fact that it affects Google's core business, the company is likely to appeal the decision. Google has previously affirmed that its practices were well within the confines of the law, and the search giant is doing the same this time around. In a statement, Google said:
We respectfully disagree with the conclusions announced today. We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case.
This isn't the only antitrust investigation Google is facing in the EU: the company is also facing charges for preferring its own services on its Adsense for Search platform, and bundling Google Search as the default search engine on Android.