- Google was fined €2.42billion for abusing its dominance as a US search engine
- Fine dished out by European Commission competition chief Margrethe Vestager
- She said if anyone has been affected, they should use ruling to help their cases
- Could open the floodgates to a raft of legal claims from price comparison rivals
Gareth Davies For Mailonline
A Brussels regulator has urged Google’s rivals to sue the internet giant if its abuse of power has cost them.
Google was slapped with a record €2.42billion fine for skewing search results in favour of its own shopping services in a fresh blow to the US company earlier this week.
The European Commission’s decision to levy the record penalty for breaking anti-trust laws could lead to a string of legal cases from rivals claiming their business has been harmed by its actions.
And Margrethe Vestager, the woman who dished out the punishment, has said any business claiming to have been affected should use her ruling to prop up its case.
EC competition chief Margrethe Vestager said Google had ‘abused its market dominance’ as the world’s most popular search engine
Google was slapped with a record €2.42billion fine for skewing search results in favour of its own shopping services in a fresh blow to the US web giant
Vestager, the European Commission’s competition chief, told the Sunday Times: ‘It is for everyone who feels they have been hurt by the illegal Google behaviour to take this report and use in court as part of their evidence will have an influence.’
When she made her judgement, she said Google had ‘abused its market dominance’ as the world’s most popular search engine.
‘Google has come up with many innovative products and services that have made a difference to our lives,’ she said.
‘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.’
The European Commission’s decision to levy the record penalty for breaking anti-trust laws is likely to anger US President Donald Trump
The watchdog launched an investigation into Google Shopping seven years ago amid complaints it gave the service a prominent position on the internet search engine, while rival services were demoted.
The EC gave the Mountain View, California, company 90 days to stop or face fines of up to 5 percent of the average daily worldwide turnover of parent company Alphabet.
Google could face claims by consumers, says expert
Oliver Fairhurst, Associate and competition law specialist at law firm Lewis Silkin told MailOnline: ‘The decision is a real kicking for Google. The fine is around double the amount of the previous largest fine issued by the Commission, showing how seriously the behaviour is viewed.
‘Google will now have to work out how it is going to comply. It will probably change the way in which its “Shopping” results are shown, so consumers may find that they have to choose who provides the comparison at the top of a Google search. The end result might be similar to the default search engine option provided in Internet Explorer.
‘It may also mean that Google faces legal claims arising out of competitors (and even consumers) who say that they lost out because of the behaviour.
‘One major caveat to all this though is that Google is very likely to appeal, and any such appeal process may take us well into the 2020s’.
Anti-trust cases against US companies have stoked anger in Washington and the EU could now face the wrath of Mr Trump, who won office on a pledge to adopt a more protectionist stance towards US companies.
The case comes a year after Vestage angered the Obama administration with an order that Apple repay 13 billion (£11.5m) euros in back taxes in Ireland.
The case is one of three against Google and of several against blockbuster US companies including Starbucks, Apple, Amazon and McDonalds.
The EC said Google was the most dominant search engine across the 31 countries in the European Economic Area (EEA).
It found that Google had handed its comparison shopping service an illegal advantage in 13 EEA countries, including in the United Kingdom and Germany where it was launched in 2008.
The abuse caused traffic to Google’s shopping service to jump 45-fold in the United Kingdom, 35-fold in Germany and 19-fold in France.
However, the demotions to rival websites triggered sharp reduction in traffic, with some UK sites seeing visitor numbers plunge 85%.
While an EU record, the fine is well below the maximum possible of about 8 billion euros (£7m) or 10 per cent of Google’s total revenue last year.
It follows the internet search giant’s controversial £130 million deal with HM Revenue & Customs in January 2016 to settle a 10-year tax inquiry into its UK business.
Battle of the big beasts: How the EU and Google have fought over the Internet
As the European Union fines Google for abusing its dominance in online searches, here is a look back at the key dates in the bloc’s legal tussle with the technology company.
November 2010 – The EU opens formal inquiry into whether Google manipulates search results in a way that favours its own business. The probe includes whether the search results favour Google’s services, such as its price comparison business, how it displays the contents of rivals, and how it manages ads.
April 2013 – Google offers change to its practice in the hope of ending the investigation.
The EU has been a constant thorn in Google’s side over the years. Pictured: Flags fly at the European Commission headquarters in Brussels
July-December 2013 – After feedback from complainants, the EU twice rejects Google’s offer to change its search results as not good enough.
Feb 2014 – The EU and Google reach a tentative agreement on how to fix the search results. This keeps Google from paying a fine.
May 2014 – In a separate case, the European Court of Justice rules that Google must consider EU citizens’ requests to remove irrelevant or embarrassing personal information that pops up on a search of their names.
Sept 2014 – After receiving complaints from Google’s competitors, the EU appears to make a U-turn on its settlement with Google on search results, declaring it insufficient.
April 2015 – After five years of investigations and talks, EU formally charges Google with abusing its dominant position in search results, a step up in the legal battle. It also opens a preliminary investigation into whether Google uses its Android mobile operating system to rig the market for apps.
April 2016 – The EU charges Google with using Android to gain market advantage in mobile apps.
June 2017 – The EU fines Google a record 2.42 billion euros ($2.72 billion) for breaching antitrust rules with its online shopping service. It says Google abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
But the penalty is likely to leave a bigger dent in Google’s pride and reputation than its finances.
Alphabet has more than $92 billion (82 billion euros) in cash, including nearly $56 billion (50 billion euros) in accounts outside of Europe.
Vestager said Google had ‘abused its market dominance’ as the world’s most popular search engine
In the other Google cases, the EU is examining Google’s AdSense advertising service and its Android mobile phone software.
The Commission, which polices EU competition policy, launched an initial investigation into Google in 2010 following complaints from rivals such as Microsoft and Trip Advisor that it favoured its own shopping services when customers ran searches.
Vestager’s predecessor, Joaquin Almunia, made three attempts to resolve the dispute but in each case intense pressure by national governments, rivals and privacy advocates scuppered the effort.
In a statement, Google said: ‘When you shop online, you want to find the products you’re looking for quickly and easily.
‘And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.
‘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.’
In the firing line: Other American companies probed by the EU
Brussels came down hard last year on the world’s most valuable and iconic company, Apple, ordering it to repay Ireland a record 13 billion euros ($14.3 billion) in back taxes.
The August 2016 ruling found that Apple had benefited from a series of Irish sweetheart tax deals that were illegal.
The US Treasury Department roundly rejected the reasoning of the commission’s decision, and Apple and the government of Ireland both filed appeals.
In the wake of the LuxLeaks tax scandal the EU launched further inquiries into the practice of countries offering extremely low corporation tax rates in an effort to attract multinationals.
In October 2015 the EU ordered US coffee maker Starbucks to repay the Netherlands 30 million euros in back taxes.
The EU launched a formal investigation in December 2015 into tax deals between US fast food giant McDonald’s and Luxembourg, saying its preliminary assessment was that the arrangements breached state aid rules.
The case against McDonald’s stemmed from a complaint by trade unions and the charity War on Want that accused McDonald’s of avoiding around one billion euros ($1.1 billion) in taxes between 2009 and 2013, by shifting profits from one corporate division to another, and paying no local tax in Luxembourg.
Brussels has launched an investigation into Amazon’s tax arrangements over its tax deals in Luxembourg.
In June 2015 it also opened a formal investigation into the Seattle-based online retail giant’s e-book distribution.
In a historic case in March 2013, the European Commission fined US giant Microsoft 561 million euros ($638 million) for failing to provide clients with a choice of internet browsers for Windows 7, as it had promised to do.
It also fined the company 899 million euros in 2008, subsequently reduced to 860 million euros, for failing to comply with an order to share product information with rivals so that their software could work with Windows.
That came on top of a then-record fine of 497 million euros in 2004 for violating EU competition rules.
The EU in May fined US social media giant Facebook 110 million euros ($120 million) for providing incorrect and misleading information on its takeover of WhatsApp, imposing its biggest penalty for such a breach.
The admonishment came after EU regulators cleared the then $19 billion Facebook acquisition of WhatsApp in late 2014, a decision that faced criticism in Europe.
INTEL, the world’s biggest chipmaker, was in May 2009 fined a record 1.06 billion euros. The EU says it abused its stranglehold on the semiconductor market to crush its main rival, AMD.