EU to slap Google with record fine this week, sources say

EU to slap Google with record fine this week, sources say



Google has been slapped with a record £2.1billion fine for skewing search results in favour of its own shopping services in a fresh blow to the US web giant.

The European Commission's decision to levy the record penalty for breaking anti-trust laws is likely to anger US President Donald Trump.

And the web giant now faces a string of legal cases from rivals claiming their business has been harmed by its actions.



EC competition chief Margrethe Vestager said Google had 'abused its market dominance' as the world's most popular search engine.

'Google has come up with many innovative products and services that have made a difference to our lives,' she said.

'That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals.



'Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.

'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.'



The watchdog launched an investigation into Google Shopping seven years ago amid complaints it gave the service a prominent position on the internet search engine, while rival services were demoted.

The EC gave the Mountain View, California, company 90 days to stop or face fines of up to 5 percent of the average daily worldwide turnover of parent company Alphabet.



Anti-trust cases against US companies have stoked anger in Washington and the EU could now face the wrath of Mr Trump, who won office on a pledge to adopt a more protectionist stance towards US companies.

The case comes a year after Vestage angered the Obama administration with an order that Apple repay 13 billion (£11.5m) euros in back taxes in Ireland.

The case is one of three against Google and of several against blockbuster US companies including Starbucks, Apple, Amazon and McDonalds.

The EC said Google was the most dominant search engine across the 31 countries in the European Economic Area (EEA).

It found that Google had handed its comparison shopping service an illegal advantage in 13 EEA countries, including in the United Kingdom and Germany where it was launched in 2008.

The abuse caused traffic to Google's shopping service to jump 45-fold in the United Kingdom, 35-fold in Germany and 19-fold in France.

However, the demotions to rival websites triggered sharp reduction in traffic, with some UK sites seeing visitor numbers plunge 85%.

While an EU record, the fine is well below the maximum possible of about 8 billion euros (£7m) or 10 per cent of Google's total revenue last year.

It follows the internet search giant's controversial £130 million deal with HM Revenue & Customs in January 2016 to settle a 10-year tax inquiry into its UK business.



But the penalty is likely to leave a bigger dent in Google's pride and reputation than its finances.

Alphabet has more than $92 billion (82 billion euros) in cash, including nearly $56 billion (50 billion euros) in accounts outside of Europe.  



In the other Google cases, the EU is examining Google's AdSense advertising service and its Android mobile phone software.

The Commission, which polices EU competition policy, launched an initial investigation into Google in 2010 following complaints from rivals such as Microsoft and Trip Advisor that it favoured its own shopping services when customers ran searches.

Vestager's predecessor, Joaquin Almunia, made three attempts to resolve the dispute but in each case intense pressure by national governments, rivals and privacy advocates scuppered the effort.

In a statement, Google said: 'When you shop online, you want to find the products you're looking for quickly and easily.

'And advertisers want to promote those same products. That's why Google shows shopping ads, connecting our users with 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.'