Google is being fined an unprecedented $2.7 billion by European Union regulators for using tactics to steer traffic preferentially to its search engine services over competitors. Here’s the breakdown:
The EU’s Accusations
- The EU is claiming that Google is illegally pushing its search rankings for Google Shopping above competitors, centered around practices in 13 EU countries.
- The antitrust fine the EU slapped Google with is more than double any prior EU suit against a U.S. company.
- This suit is one of three current accusations against Google—the other two related to the advertising business of Google’s Android system.
The Key Players
- Margrethe Vestager, the European Union Antitrust Chief, is spearheading the suit. Appointed in 2014, she has been known to take an aggressive approach to enforcement of antitrust regulations.
- Kent Walker, the SVP and General Counsel for Google, is acting as the spokesman for the company in the matter. While he currently manages Google’s global legal team, he previously prosecuted technology crimes for the U.S. Department of Justice.
- Kent Walker contested that:
“While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products that they want, not to websites where they have to repeat their searches.”
Past EU Antitrust Cases
- The “War with Silicon Valley” has been waged in the past couple of years against large American tech companies. The main reasons for fines have been related to taxes, acquisitions, and unfair advantage.
- Most recently, the EU demanded that Apple pay $14.5 billion in back taxes to Ireland due to illegally claimed tax benefits.
- Other U.S. companies recently under scrutiny include Facebook, Starbucks, Amazon, and Qualcomm.
- Google is in the process of reviewing the decision and considering an appeal.
- Shares of Alphabet (Google’s parent company) fell 2.3% directly after the EU’s announcement.
It might be worth keeping track of this story as it develops because Google’s influence in search and advertising is so extensive that any change, especially one on a scale such as this, could have lasting results for businesses.