Google Fined $2.7 Billion for Illegal Search Manipulating Practices

Google is required to end within 90 days what the European Union says are abusive practices, or will be fined penalty payments up to 5 percent of the average daily worldwide turnover of its parent company, Alphabet.

by Kristin LaFratta, MassLive.com, Springfield, Mass. / June 27, 2017
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(TNS) -- The European Union struck one of the world's biggest tech giants with a $2.7 billion regulatory fine on Tuesday. The EU asserts Google is unfairly favoring some of its own search services over rival search engines.

The EU's investigation into Google included company documents, experiments and surveys, financial data and 5.2 Terabytes of Google search results, concluding that the tech mammoth had manipulated its search engine to favor its own product, an online shopping service.

"Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service," the EU said in a statement.

Google is required to end what the EU says are abusive practices within 90 days, or will be fined penalty payments up to five percent of the average daily worldwide turnover of its parent company, Alphabet.

"What Google has done is illegal under EU antitrust rules," Margrethe Vestager, EU Commissioner, said in a statement. She added that the tech giant's practices denied other companies the chance to compete, but "most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."

What is comparison shopping?

In 2004, Google entered the online marketplace in Europe with "Froogle," later renamed "Google Shopping" in 2013. The EU is asserting that Google - a company that generates nearly 90 percent of its revenues from online advertisements - rigged its widely-used search engine to show its own shopping services first.

The EU says that when users searched for a product, Google Shopping would show at the top of search results, while other highly-ranked services like Amazon or eBay appeared on average on the fourth webpage of Google results. Evidence reportedly shows that the 10 highest-ranking search results on the first webpage generate 95 percent of all clicks, and the single top result receives about 35 percent of all clicks.

According to the EU, Google's search manipulating began in Germany and the United Kingdom in 2008, extending over the next five years to 11 other European countries. Such a practice would breach EU antitrust rules, which say that dominant companies must uphold their "special responsibility" to "not abuse their powerful market position by restricting competition."

Google is not the first American tech company at which the EU has taken aim. A report by The New York Times said that EU Commissioner Vestager has made aggressive strides to regulate Silicon Valley giants.

Such fights have included a demanded repayment by Apple to Ireland of $14.5 billion in taxes, an open investigation into how Amazon handles taxes in Europe, and poking into Facebook's alleged dominance over users' digital data.

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