November 28, 2024
Google fined £2 billion over shopping service
The European Commssion says Google’s practices breach competition rules, while the company says it disagrees and mulls an appeal.
GOOGLE has been ordered to pay a record fine of £2.1bn (€2.42bn) for abusing its dominance as a search engine to boost its shopping comparison service.
The European competition watchdog said the company had breached anti-trust rules.
It said Google’s search engine had systematically given prominence to its own comparison shopping service over others, so that it was displayed at or near the top of search results.
The company has been ordered to end the conduct at the centre of the European Commission probe or face penalty payments of up to 5% of the average daily turnover of parent company Alphabet.
Google said it “respectfully” disagreed with the ruling and would review the decision in detail as it considers an appeal.
Commissioner Margrethe Vestager, in charge of competition policy, said Google’s innovative products and services had been “a good thing” but its strategy for attracting customers to its online shopping service was not just about being better than 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,” she said.
“What Google has done is illegal under EU anti-trust 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.”
Google earns 90% of its revenue from adverts shown to consumers in response to a search engine query, the EC ruling said.
But in 2004 it entered the separate market of comparison shopping in Europe – a service first called Froogle, later known as Google Product Search, then Google Shopping.
It allows consumers to compare products and prices online and find deals from all types of retailers.
When Google entered this market there were already a number of established players and its initial market performance was “relatively poor”, the EC said, and from 2008 it began to implement a “fundamental change in strategy”.
The ruling found that search results gave prominence to Google’s own shopping service and demoted rivals, giving it a “significant advantage”.
Google’s comparison service was then found to have made significant gains in traffic at the expense of its rivals, with a 45-fold increase in the UK, 35-fold in Germany and 19-fold in France.
Rival websites saw declines of 85% in the UK, up to 92% in Germany and 80% in France – sudden drops which the commission said could not be explained by other factors.
Google has now been told it must “apply the same processes and methods to position and display rival comparison shopping services in Google’s search result pages as it gives to its own comparison shopping service”.
The EC has already come to preliminary conclusions in two separate cases – involving the Android operating system and the AdSense advertising platform – that Google has abused a dominant position.
Google senior vice president Kent Walker said: “When you use Google to search for products, we try to give you what you’re looking for.
“Our ability to do that well isn’t favouring ourselves, or any particular site or seller – it’s the result of hard work and constant innovation, based on user feedback.
“Given the evidence, 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.”
Google said the EC should have considered another reason why rival shopping services may not have done so well – because major retail platforms such as Amazon had instead become the first port of call for product searches. – news.sky.com
