EU antitrust regulator to fine Google record €3 bn for manipulating search results

The European antitrust regulator will impose a record €3 billion ($3.4 billion) fine on Internet search giant Google in the coming weeks for abusing its dominance of the online search market in the region, the UK's Telegraph newspaper today reported.

The €3-billion fine would surpass the €1.1 billion fine levied by the European Commission (EC) on US chipmaker Intel.

The report said that officials at the EC aimed to make an announcement before the summer break and could make their move as early as next month, although the bill on Google's online competition practices had not been finalised.

The maximum fine that can be levied on the search giant is €6.6 billion, or a tenth of Google's annual revenues.

Apart from the massive fine, Google will also be banned from continuing to manipulate search results to favour itself and harm rivals, the report said.

In 2010, the EC launched an anti-trust investigation against Google following complaints from three European internet companies alleging that the internet search giant suppresses competition by using penalty filters to place certain sites from its search results so far down the rankings that they are hardly found found.

The Brussels-based anti-trust regulator has asked Google to explain how its search engine operates and has questioned the way it sells advertising after it received complaints from three companies - UK price comparison site Foundem, French legal search engine called ejustice.fr, and shopping site Ciao, owned by Microsoft.

Google controls over 90 per cent of the online search market in Europe, which is much in excess than the 65 per cent in the US.

Foundem had alleged that Google's algorithms demote their site in Google's search results because they are a vertical search engine, and being a direct competitor to Google, while ejustice.fr 's complaint echo these concerns.

Foundem had earlier said in a blog post, ''Google has always used various penalty filters to remove certain sites entirely from its search results or place them so far down the rankings that they will never be found.''

''Whereas these penalties used to be reserved for spam, or sites caught attempting to cheat Google's algorithms, they are now increasingly targeted at perfectly legitimate vertical search and directory services.''

''It may not be coincidence that, collectively, these services present a nascent competitive threat to Google's share of online advertising revenues.''

Vertical search is different from keyword-based, horizontal search used by Google. In Google search, a search for flights will return with a list of sites that sell flights, while a vertical search engine like Foundem will perform a highly specialised search that will search more extensively and return with results detailing all actual flights.

Google blamed competitors for raising these issues since Foundem is a member of an organisation called Initiative for a Competitive Online Marketplace, which is funded partly by Microsoft, while Ciao did not have a problem as long as it was an AdSense partner with Google, but it started receiving complaints after Microsoft acquired Ciao in 2008.

Jaoquin Almunia, the previous Competition Commissioner, sought to agree to a deal without bringing formal charges, but Competition Commissioner Margarethe Vestage has brought a new, more aggressive style to the role, the report added, citing lawyers in Brussels.