Google was hit with Europe’s largest ever antitrust fine of a record-breaking €2.42bn (2.7 billion USD or 175 billion INR) after a seven-year investigation into claims it had used the power of its search engine for abusing its dominance of the search engine market to favour and promote its online shopping service to crush rivals to its price comparison shopping service.
Google, meanwhile, could appeal the European Commission decision in EU courts, essentially delaying the final verdict by years. In a statement, the company said, “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.”
What is the issue?
Google has a 90 per cent share of internet searches around Europe, making it a monopoly. Under European law, it is prohibited from using this position to give other services an advantage. The EU says that from 2008 it has promoted its online shopping services in search results.
How did it do that?
When you search Google for products like “handbags” or “televisions”, you will see a prominent and picture-filled box showing deals from various retailers. This service is run by Google and the company takes a cut of sales.
What happens now?
EU regulators have given Google 90 days to stop its illegal activities or face fines of up to 5% of the average daily worldwide turnover of parent company Alphabet. This would be around $4.5bn (£3.5bn).
Margrethe Vestager, commissioner in charge of the policy related to the competition appreciated google for providing valuable services, but iterated the fact that making own product better then rivals , is not the right thing to do. According to him the practice was not trustworthy and this goes against EU rules leading to the aforesaid penalty.
Why is this a landmark verdict?
In our country it is very hard for the government to grab the collar of any big Indian or foreign company. As Indians, we are not used to watch such brave decision in our country. The verdict is significant not only because of its historically high fines but also because it brings to the forefront of monopolies in the tech world. Monopolies are known to be dangerous for an economy as they kill competition, restrict innovation and harm medium- and small-sized businesses.
But monopolies are widespread in the tech world, and a conversation needs to be had about their consequences. (Presently, the EU has confirmed that it is not considering whether or not it might be necessary to break up Google as a monopoly.)
Additionally, the decision comes at a time when US companies are accusing EU regulators of being biased against American companies by subjecting them to unfair rules, regulations and fines. (However, if we examine the antitrust decisions made by the European Commission between 2010 and 2017, it becomes clear that only 15% of them have hit US companies while nearly 75% have targeted European firms.