EU
antitrust regulators hit Alphabet (GOOGL.O)
unit Google with a record 2.42-billion-euro ($2.7 billion) fine on Tuesday,
taking a tough line in the first of three investigations into the company's
dominance in searches and smartphones.
It is
the biggest fine the EU has ever imposed on a single company in an antitrust
case, exceeding a 1.06-billion-euro sanction handed down to U.S. chipmaker
Intel (INTC.O)
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 U.S. 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 U.S. consumer review website Yelp (YELP.N),
TripAdvisor (TRIP.O),
UK price comparison site Foundem, News Corp (NWSA.O)
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.
