On Tuesday 27 June, the European Commission handed down a fine of €2.42 billion to the American company Google over abuse of dominant position in the European Economic Area.
Three months to change its practices. As EUROPE announced the day before (see EUROPE 11816), the Commission has indeed handed the American web giant a record abuse of dominant position fine of €2.42 billion. The American company now has a period of 90 days to end the practices that led to the fine, or the European Commission could order it to pay penalties of up to 5% of the average global daily turnover of Google’s parent company, Alphabet.
Following the investigations conducted by the Commission, the institution noted that the American company had used its dominant position to block its competitors on the price comparison market. Readers may recall that it notified its objections to the company on 15 April 2015 (see EUROPE 11295).
Downgrading competitors in search results. Google entered the price comparison market in 2004 with Froogle, which has since been renamed Google Shopping. As this service was competing poorly with its rivals, Google made a decision in 2008 to change its strategy and put its own price comparison tool into pole position when consumers use its search engine to compare products. The rival price comparison tools were downgraded in the search results.
The Commission noted a clear drop in ‘clicks’ for Google’s competitors (sometimes by 90%) in favour of Google Shopping, in 13 countries of the European Economic Area (EEA) in which the company had introduced its price comparison service.
The Commission’s services carried out millions of searches, according to the Commissioner for Competition, Margrethe Vestager. Additionally, Google, its competitors and consumers were consulted, to ensure that the decision was based on concrete evidence, the Commissioner told a press conference.
The European Commission found that the practice at issue had allowed Google’s price comparison service to achieve considerable gains in traffic at the expense of its competitors and to the detriment of European consumers, as it deprived them of genuine choice and innovation.
The institution therefore concluded that article 102 of the Treaty on the Functioning of the European Union (TFEU) and article 54 of the Agreement on the European Economic Area (EEA) prohibiting abuses of dominant position had been breached and handed Google a fine of €2,424,495,000. The fine becomes the highest ever imposed by the Commission for an abuse of dominant position, as it is more than twice that handed down to Intel on 13 May 2019, of €1.06 billion (see EUROPE 9901).
Vestager said that “what Google has done is illegal under EU anti-trust rules. It denied 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”.
“Europe is not the Wild West”. Reactions followed hot on the heels of the announcement of the sanctioning of the Internet giant. The American company announced that it cannot accept the institution’s conclusions. “We will review the Commission’s decision in detail as we consider an appeal”, said Kent Walker, Google VP. In the opposite corner, Monique Goyens, Director General of the European Consumer Organisation (known by its French acronym, BEUC), welcomed the decision. “The Commission confirmed that consumers do not see what is most relevant for them on the world’s most used search engine, but rather what is best for Google”, she said, adding that she expected the company to change its practices. There was equal satisfaction at the S&D group at the European Parliament, whose president, Gianni Pittella, said that the Commission’s decision shows that “Europe is not the Wild West”.
Two other cases ongoing. Vestager also reported back on two other cases in which she suspects the American company of violating EU rules by abusing its dominant position. Google stands accused of similar practices concerning its Android operating system (see EUROPE 11536) and concerning AdSense, a system whereby the company limits the ability of certain third-party websites to display contextual advertising of its competitors.
The Commissioner said that the cases were making good progress and that the preliminary conclusions drawn up in 2016 pointed to a breach of the European rules. However, she added that no decision had been made in these cases, which are still ongoing. (Original version in French by Lucas Tripoteau)