EUROPE COMMISSION SLAPS HEFTY €2BN FINE ON GOOGLE FOR BREACHING ANTITRUST RULES

Google suffered a major regulatory blow on Tuesday after European antitrust officials fined the search giant 2.4 billion euros, or $2.7 billion, for unfairly favoring some of its own search services over those of rivals.

The hefty fine marks the latest chapter in a lengthy standoff between Europe and Google, which also faces two separate charges under the region’s competition rules related to Android, its popular mobile software, and to some of its advertising products. Google denies the accusations.

By levying the fine — the biggest ever in this type of antitrust case — Margrethe Vestager, Europe’s antitrust chief, has laid down a marker as arguably the Western world’s most aggressive regulator of digital services from the likes of Google and Facebook.

Ms. Vestager has already demanded that Apple repay $14.5 billion in back taxes in Ireland, opened an ongoing investigation into Amazon’s tax practices in Europe and raised concerns about Facebook’s alleged dominance over people’s digital data. The companies deny any wrongdoing.

Such focus on Silicon Valley firms has prompted accusations from some in the United States that Europe is unfairly targeting American companies. The region’s officials vigorously deny these claims.

 Google

But with the record antitrust fine against Google — larger than the previous high of €1.06 billion against Intel in 2009 — European officials have gone significantly further than their American counterparts in determining what is, and is not, allowed to take place on the web.

“What Google has done is illegal under E.U. antitrust rules,” said Ms. Vestager in a statement on Tuesday. “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.”

Google has repeatedly denied that it has breached Europe’s tough competition rules, saying that its digital services have helped the region’s digital economy to grow and are used by hundreds of millions of Europeans each day. It also adds that there remains significant online competition in Europe, including from the likes of Amazon and eBay.

Google is likely to consider an appeal.

The antitrust ruling on Tuesday related to Google’s online shopping service, which the European Commission, the executive arm of the European Union, said received preferential treatment compared to those of rivals in specialized search results.

Analysts say these so-called vertical search products — that also include those for restaurant and business reviews — represent a fast-growing percentage of Google’s annual revenues.

While the fine is likely to garner much of the attention, focus will quickly shift to the changes that Google will now be forced to make to comply with Europe’s antitrust decision.

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Under European rules, the search giant — and not the regulator — must come up with proposals to guarantee that it treats competitors fairly when people make online search queries. The authorities can demand that Google make further changes if they are not satisfied with the initial proposals.

Analysts and many of Google’s competitors have called for an independent monitor to oversee the company’s digital services in Europe, which may potentially extend to tough oversight of its search algorithms, some of Google’s most important intellectual property. The search giant is likely to fiercely oppose such a remedy.

Google has other options, including the removal of some of its specialized search services from Europe, as well as returning them to how they operated before Europe’s investigation began almost a decade ago.

Whatever the outcome, analysts expect a protracted legal battle that will continue for several years as both Google and its rivals fight to define how the search giant can offer its services to Europeans and those farther afield.

“The changes could have ramifications beyond Google Shopping, and might even impact Google’s operations in the U.S.,” a number of American companies that have filed antitrust complaints against Google said in a public letter ahead of the ruling on Tuesday. The signatories included Oracle, News Corporation and Yelp.

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