Google Faces Record EU Antitrust Fine
Google Faces Record EU Antitrust Fine
Penalty could reach as high as 10% of annual revenue,
which was more than $90 billion in 2016
By Natalia Drozdiak Updated June 16, 2017 4:50 a.m. ET
BRUSSELS—European Union regulators in the coming weeks
are set to hit Alphabet Inc.’s GOOGL Google with a record fine for manipulating
its search results to favor its own comparison-shopping service, according to
people familiar with the matter.
The antitrust penalty against Google is expected to top
the EU’s previous record fine levied on a company for allegedly abusing its
market position: €1.06 billion (about $1.2 billion) against Intel Corp. in
2009.
Under EU rules, the fine could reach as high as 10% of
the company’s annual revenue, which was $90.27 billion last year.
Google faces additional, and perhaps more painful,
consequences from the European Commission’s action, including possible changes
not only to its handling of its shopping service but other services as well.
The antitrust watchdog’s decision could also embolden private litigants to seek
compensation for damages at national courts.
The EU is likely to instruct Google to put its comparison
shopping service on equal footing with those of its competitors, such as
Foundem.co.uk and Kelkoo.com Ltd. Such companies rely on traffic coming to
their site from search engines like Google’s, and the equal-treatment
requirement could lead to greater visibility for rival services on the tech
giant’s platform.
The EU has been in talks with some of the complainants
about how Google should change its search results, though the precise remedy
would likely be hammered out only after a decision is announced.
Google general counsel Kent Walker has previously argued
that forcing the company to place competitors’ product ads in its search
results “would just subsidize sites that have become less useful for
consumers.”
The regulator’s move would come as welcome relief to a
range of web companies—large and small, European and American—that have been
urging the EU for years to take antitrust action against Google. News Corp, owner of The Wall Street Journal,
has formally complained to the EU about Google’s handling of news articles on
its search service.
The EU watchdog opened its investigation into Google’s
practices in 2010. The former competition commissioner, Joaquín Almunia,
subsequently drafted various settlements with Google over more than two years
of talks, but the steps offered by Google were rejected in 2014 following
criticism from competitors, as well as from politicians in Germany and France.
That led the way for Mr. Almunia’s successor, current EU
antitrust chief Margrethe Vestager, to file formal accusations against
Google—the first regulator in the world to do so—by issuing a so-called
statement of objections in the comparison shopping case in April 2015.
An EU decision against Google would set the regulator
apart from authorities in the U.S.; they closed their own investigation into
Google’s search practices in 2013 after the company agreed to voluntary
changes. The divergence could reflect in part Google’s greater presence in
search on the continent, where it holds about 90% of the market.
Google can appeal any decision by the European Commission
in the shopping case to the bloc’s top courts in Luxembourg, dragging out the
legal battle as a final ruling could take years.
A decision in the case could set precedents for how the
U.S. technology company operates in other domains, including with its local and
travel services—areas the EU has also been investigating. Meanwhile, EU
antitrust cases against Google over its Android mobile-operating service and
its advertising service Adsense remain open.
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