Google fine is small change compared with EU’s threat

Aoife White
Bloomberg News

Google’s record-breaking 2.4 billion-euro ($2.7 billion) European Union fine could end up being just a fraction of the costs from the EU’s demand that it stop skewing search results to favor its own shopping site.

While the penalty will barely make a dent in its $90 billion cash hoard, Google faces the prospect of less ad revenue and a regulatory backlash targeting other services from maps to restaurant reviews as well as the threat of even more penalties.

The search-engine giant will have “the sword of Damocles hanging over its head,”said Jay Modrall, a lawyer for Norton Rose Fulbright in Brussels. That’s because it’s no longer Google’s choice on how it makes changes to allay EU concerns. Instead, it’s “under a legal requirement to do so and under notice that if its commitments are not sufficient, it’ll be fined even more.”

EU antitrust chief Margrethe Vestager’s decision marks the end of a seven-year probe fueled by complaints from small shopping websites as well as bigger names, including News Corp., Axel Springer SE and Microsoft Corp. European politicians have called on the EU to sanction Google or even break it up while U.S. critics claim regulators are targeting successful American firms.

Alphabet Inc.’s Google must “stop its illegal conduct” and give equal treatment to rival price-comparison services, according to a binding order from the European Commission. It’s up to Google to choose how it does this and inform the EU of its plans within 60 days.

Vestager gave Google a 90-day ultimatum to find ways to give equal treatment to smaller price-comparison services that compete with the Google Shopping ads that appear when people search for products. The EU will also monitor Google for five years and can force the company to pay additional fines of up to 5 percent of its daily revenue if it doesn’t comply.

Kent Walker, the general counsel for Mountain View, California-based Google, said the company disagrees with the EU’s conclusions and will consider a court appeal.

“When you shop online, you want to find the products you’re looking for quickly and easily,” Walker said in a blog post. “We think our current shopping results are useful and are a much-improved version of the text-only ads we showed a decade ago.”

Google has been pushing its own comparison-shopping service since 2008, systematically giving it prominent placement when people search for an item, the EU said. Rival comparison sites usually only appear on page four of search results, effectively denying them a massive audience as the first page attracts 95 percent of all clicks.

“The bias at the moment is absolutely brazen,” said Shivaun Raff of Foundem, a British price-comparison site that helped kick off the EU case with a complaint on how the site appeared in search results.