The European Union hit Google with a record-breaking $2.7 billion fine last week. The charges against U.S. tech giant is that it controls search results in a way that gives an undue advantage to its own services while damaging the rivals ranking on its search page.
After several rival complaints and a lengthy seven-year investigation that was launched in 2010, the European Commission on Tuesday levied the biggest ever financial penalty on Google.
The company has been asked to change its practices within 90 days or face additional penalties. As, under EU antitrust rules, the practice Google is following is illegal, as it denies European consumers a genuine choice of services.
Google has rejected the EU’s charges and issued a statement in its defense. The company mentioned that it displays its results to help consumers find the exact products they’re looking for quickly and easily. Some of Google’s loudest critics in the EU have been its rivals in the United States, like Yelp, News Corp and Oracle.
The fine levied on Google is the biggest fine for a single company in an EU antitrust case, exceeding a 1.06-billion-euro approval handed down to US chipmaker Intel in 2009.
Google analytically gives prominent placement to its own comparison shopping service: When a user searches for anything on Google search engine, relevant search results from Google’s comparison shopping service are displayed at or near the top of the search results.
What is Comparison Shopping?
The practice of comparing prices before actually shopping to achieve the best deals and pricing on merchandise and services.
Google has reduced rivals comparison shopping services in its search results: Rival comparison shopping services appear on the basis of Google’s generic search algorithms. Due to a number of criteria in Google’s search algorithms the rivals search result are shown at the bottom. Google’s own comparison shopping service do not face such demotions as they are not subjected to these generic search algorithms.
Due to this behaviour, Google’s comparison shopping service is more visible to consumers in Google’s search results, while rival comparison shopping services are much less noticeable. Thus increasing the traffic for Google’s comparison shopping service.
What has Google done wrong?
Google has a monopoly in the search engine space, almost 90% of Google’s revenue comes from advertisements. In 2004, Google entered the market of comparison shopping in Europe and the products, which were initially named ‘Froogle’ were re-named to ‘Google Product Search’ in 2008. Finally they were labelled as ‘Google Shopping’ in 2013.
Google is a product comparison platform where users can easily compare products and their prices online unlike other shopping sites.
The European Union states that since 2008, Google has systematically given prominent placement to its own comparison shopping service. Due to this other comparison shopping services are demoted and they suffer to a large extent on traffic.
Is this the first time Google is under investigation?
This is not the first time the EU has opened investigations into Google. There are two other cases of abuse of dominance still being investigated. The first relates to AdSense.
The second involves that technology companies make it difficult for others to have their apps and search engines preinstalled on Android devices.
Google has published a response on their blog stating that they disagree with the conclusions announced by the European Commission. The company states that when people shop online, they want to find the exact products they are looking for, that is the reason why the company shows shopping ads which connects their users with results which are useful for them.
According to Google, users prefer links that take them directly to the products they want and not to websites where they have to repeat their searches. Also there results are based on user feedback. Google will be reviewing the Commission’s decision and is considering filing an appeal.