Alphabet’s Google has been ordered to pay a €2.42bn fine after losing a legal battle in the European Union (EU) over anti-competitive practices. The European Commission (EC) imposed the fine in 2017 after it found that Google had abused its dominant market position. The search engine giant had been accused of favouring its own price comparison shopping service over those of rivals in search results. This decision has now been upheld by the European Court of Justice.
The initial ruling followed a detailed investigation by the EC. The Commission determined that Google restricted competition by disadvantaging smaller comparison shopping services. It concluded that Google abused its dominant position in 13 countries in the European Economic Area (EEA) by, among other things, displaying its own shopping results in prominent ‘boxes’ with images and text. Meanwhile, competing services’ results were shown as generic blue links, which were more likely to be downgraded by Google’s algorithms.
In 2021, Google appealed the decision. The company argued that its actions did not substantially impact competition. The General Court of the European Union largely upheld the decision and maintained the fine. However, it annulled part of the decision about Google’s impact on the general search services market, stating this was not proven.
The abuse within specialised product search markets was confirmed. Google and Alphabet then appealed to the European Court of Justice. The appeal has now been dismissed, and the €2.42bn fine remains.
EU court defends Google ruling
The European Court of Justice clarified that EU law does not penalise a company for holding a dominant position but for abusing it.
“The Court of Justice states that it is true that it cannot be considered that, as a general rule, a dominant undertaking which treats its own products or services more favourably than it treats those of its competitors is engaging in conduct which departs from competition on the merits irrespective of the circumstances of the case,” said the court. “However it finds, in the present case, that the General Court correctly established that, in the light of the characteristics of the market and the specific circumstances of the case, Google’s conduct was discriminatory and did not fall within the scope of competition on the merits.”
The ruling also made Alphabet, as Google’s sole shareholder, jointly and severally liable for €523.5m of the total fine.
This case is part of the EU’s wider effort to regulate the market dominance of major tech companies. Google’s latest fine is one of the largest ever imposed by the EC under its competition policy. The search engine firm has faced multiple fines from the EU, amounting to over €8bn for various competition rule breaches, including fines related to its Android operating system and its advertising service, AdSense.
Google is still under investigation for other potential anti-competitive practices in the EU. In a related development, Apple has been ordered by the European Court of Justice to pay €13.1bn in back taxes, along with €1.2bn in interest, to Ireland. This verdict supports the EC’s 2016 finding that Ireland provided Apple with unfair tax advantages between 1991 and 2014, which were ruled as illegal state aid. The court’s decision means that Apple must now reimburse the Irish government for the reduced taxes it paid during that period.
Google is also facing legal scrutiny in the US, where its conduct in online advertising is being analysed in open court. The search giant’s lawyers spent much of yesterday listening to Department of Justice prosecutors explain their definition of what constitutes an ‘illegal monopoly’ in the marketplace. Whatever the outcome of that trial, argued Forrester senior analyst Mo Allibhai, publishers’ relationship with Google is already beginning to change.
“With Google search serving as their primary driver of traffic and Google’s [supply side platform] as a major revenue-sharing partner, publishers are taking a closer look at how age-old practices (like scraping website content to determine search relevance) might power cutting edge technologies like AI-generated summaries,” said Allibhai. As such, added the analyst, “many publishers [may] find that a more proactive and strategic approach to their Google partnerships yields more favourable results.”
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