Google has been fined a with a record €2.42 billion ($2.7 billion) fine by the European Commission, having been accused of “skewing” search results in favour of its shopping ads.
The ads, which are labelled “sponsored”, allow retailers to promote relevant product images and prices, along with review scores and the names of available outlets. The format claimed over half of marketers’ AdWords budgets in 2016, according to Sidecar, with over 30% coming from mobile where the ads enjoy top billing.
It’s the regulator’s largest fine handed out to date, having ruled the search engine had “abused its market dominance” by promoting its shopping comparison service at the top of general search results.
In addition to the fine, the European Commission has also ruled that Google must end its anti-competitive practices within 90 days or face a further penalty.
According to the regulator, if the search engine doesn’t change the way it operates its Shopping service within three months, it may be forced to make payments of 5% of parent company Alphabet’s average daily worldwide earnings, which according to the BBC, could amount to about $14 million a day.
In response to the ruling, a spokesperson for Google has commented that its Shopping ads facilitate users finding products they’re searching for “quickly and easily” and connects consumers with the same products promoted by “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,” they commented.
While the fine is a landmark penalty, the European Commission reportedly has the power to fine Alphabet up to 10% of its annual revenue, which was over $90 billion last year, while total assets sit at around $172 billion.
Coming to a head today, this particular case has been ongoing since 2010 following complaints by companies including Microsoft. The European Commissioner stated at the time, “Dominant companies have a responsibility not to abuse their powerful market position by restricting competition with others in markets where they are dominant or in neighbouring markets,” and added that the EU’s “preliminary view” was that Google’s artificial favouring of its own shopping service on general search results “constitutes an abuse”.
Price comparison sites
It’s not just Google’s Shopping service which has taken flak from competitors for anti-competitiveness. The company made an aggressive push into the price comparison market in 2015 with the rollout of a number of products, including mortgage and car insurance price comparison tools, making a later move towards airfares.
With price comparison sites – such as GoCompare, Comparethemarket and SkyScanner - making revenue by referral-based commission traffic, Google threatened to allow consumers to bypass comparison sites altogether, sending the user straight to the retailer’s site.
Writing for PerformanceIN on the rollout of these tools, Indago Digital’s Tom Sadler, said, “Personally, I have no problem with them displaying their own products, it is after all their own search engine, but I would be feeling quite nervous if I worked for or owned shares in a price comparison website.”
In the wake of today’s ruling, however, price comparison site Kelkoo made its feelings clear speaking to the BBC:
“An entire industry has suffered because of Google’s unlawful, anticompetitive behaviour, and it has become a genuine struggle for survival for the likes of [us],” said, Kelkoo CEO, Richard Stables; ”At the same time, Google’s abuse has raised costs for merchants, and it has meant higher prices for consumers and much more limited choice.”