Brussels, Cairo – European Union antitrust regulators hit Google on Tuesday with a historic and unprecedented fine of 2.42 billion euros (2.7 billion dollars) over the company’s dominance in searches and smartphones.
The fine against Alphabet unit Google, is the biggest the EU has ever imposed on a single company in an antitrust case.
It exceeded a 1.06-billion-euro sanction handed down to US chipmaker Intel in 2009.
The European Commission said the world’s most popular internet search engine has 90 days to stop favoring its own shopping service 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, which settled with US enforcers in 2013 without a penalty after agreeing to change some of its search practices.
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.
The company has also been accused of blocking rivals in online search advertising.
The Commission found that Google, with a market share in searches of over 90 percent in most European countries, had systematically given prominent placement in searches to its own comparison shopping service and demoted those of rivals in search results.
“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.
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.
The action follows a seven-year investigation prompted by scores of complaints from rivals such as US consumer review website Yelp, TripAdvisor, UK price comparison site Foundem, News Corp and lobbying group FairSearch.
The penalty payment for failure to comply would amount to around $12 million a day based on Alphabet’s 2016 turnover of $90.3 billion. The Commission did not specify what changes Google had to make.
“This decision is a game-changer. The Commission confirmed that consumers do not see what is most relevant for them on the world’s most used search engine but rather what is best for Google,” said Monique Goyens, director general of EU consumer group BEUC.
Thomas Vinje, legal counsel to FairSearch, welcomed the Commission’s findings and urged it to act on Google’s Android mobile operating system following its 2013 complaint that Google restricted competition in software running on mobile devices.
European sources said that despite the record fine, the Commission could have gone beyond it to reach ten percent of Alphabet’s annual revenue, which in 2016 was 90 billion dollars.
According to observers, the real crisis for Google and Alphabet does not lie in the 2.7 billion dollar fine, but in their reputation and credibility with users, whether for shopping or internet searches.
The Commission’s decision “underestimates the value of those kinds of fast and easy connections,” Kent Walker, Google’s general counsel, wrote in a blog post.
Some antitrust experts believe the fine levied on Google means European regulators are more likely to rein in other US technology companies such as Apple, Amazon, Facebook and Netflix as they win over more European consumers at the expense of homegrown companies.