EC fines Google record $2.7 bn for misusing shopping service

The European Commission has fined Google 2.42 billion Euros (roughly 2.7 billion dollars) for abusing its dominance in search engine to gain illegal advantage to its own comparison shopping service.

This is the biggest fine ever levied by the European Union on any company for breach of antitrust regulations and way above the $1 billion that many expected.

The EC anti-trust commission found Google abusing its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.

The company has been asked to end the comparison service in EU within 90 days or face penalty of up to 5 per cent of the average daily worldwide turnover of Alphabet, Google's parent company.

"Google has come up with many innovative products and services that have made a difference to our lives. 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,'' Commissioner Margrethe Vestager, in charge of competition policy, said.

"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," she added.

Google, which has a monopoly in the search engine space, finds 90 per cent of its revenue from advertisements that are shown to customers along with search results. Google earns most of its revenue from this.

Google started comparison shopping in Europe in 2004 with 'Froogle', which was later re-named to 'Google Product Search' in 2008 before finally being labelled as 'Google Shopping' in 2013.

Google is not involved in any selling business like Amazon or Flipkart, which sell products directly. It merely does a comparison for customers looking for better products, helping them to make decisions.

It is a product comparison platform where users can compare products and their prices online and find deals from a multitude of online retailers of all types such as Amazon, eBay and so on.

The EC's concern is that Google has been systematically giving prominent placement to its own comparison shopping service - Google Shopping – since 2008, at the cost of other comparison shopping services which rely on traffic from Google, the dominant search engine in the world.

Page rank is extremely important when it comes to attracting visitors to a website and the top ten highest ranking search results get 95 per cent of all the clicks. It is here that Google scores with its placements and positioning.

According to the EU, Google's comparison shopping service has increased its traffic 45 times in the United Kingdom, 19 times in France, 35 times in Germany, 29 times in Netherlands, 17 times in Spain and 14 times in Italy.

On the other hand, rival shopping services have seen significant drops in numbers. The EC says certain rival websites have shown drops of up to 85 per cent in the United Kingdom, 92 per cent in Germany and 80 per cent in France.

Google, however, says the European Commission has overlooked the other side of the online shopping story.

According to Google, its shopping ads, connect users with thousands of advertisers, large and small, in ways that are useful for both. Shopping online is not just paying for a product on offer, it would also involve search for a better product or alternatives and it is simply this that Google does.

''We believe the European Commission's online shopping decision underestimates the value of those kinds of fast and easy connections. While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches.

''We think our current shopping results are useful and are a much-improved version of the text-only ads we showed a decade ago. Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users. And we show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay,'' Google pointed out .

''When you use Google to search for products, we try to give you what you're looking for. Our ability to do that well isn't favoring ourselves, or any particular site or seller--it's the result of hard work and constant innovation, based on user feedback.

Given the evidence, 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,'' it added.