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Google Faces Charges Over Shopping Service

Ela Gonca Izmirli

European Union antitrust regulators hit Google with a record 2.42-billion-euro ($2.7 billion) fine on Tuesday, after it ruled the company had abused its power by promoting its shopping comparison service at the top of search results. This case was the first of three investigations into the company’s dominance in searches and smartphones.

The Commission found that Google had systematically given prominent placement in searches to its comparison shopping service and demoted those of rivals in search results.

It is the biggest fine the EU has ever imposed on a single company accused of distorting the market. The ruling also orders Google to end its anti-competitive practices within 90 days or face a further penalty per day of up to 5 percent of Alphabet’s average daily global turnover.

The fine, equivalent to 3 percent of Alphabet’s turnover, is the biggest regulatory setback for Google. In 2013 Google settled a similar dispute in the US and had agreed to change some of its business practices to resolve Federal Trade Commission concerns that those practices could stifle competition in the markets for popular devices such as smartphones, tablets and gaming consoles, as well as the market for online search advertising.

The EU competition enforcer has also charged Google with using its Android mobile operating system to crush rivals, a case that could potentially be the most damaging for the company, with the system used in most smartphones.

“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,” European Competition Commissioner Margrethe Vestager said in a statement according to Reuters.

Google said its data showed people preferred links taking them directly to products they want and not to websites where they have to repeat their search.

“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,” Kent Walker, Google’s general counsel, said in a statement.

Google SVP and general counsel Kent Walker this morning published Google’s defense, explaining why the company promoted its search results ahead of competitors.

“Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users,” Walker said. “We show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay.”

Walker argued that Google doesn’t quite hold a monopoly on the market saying that Amazon is a “formidable competitor” in the comparison shopping space. “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,” Walker said.

Source: Reuters 

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