On June 27, 2017, the European Commission has fined Google €2.42 billion for having abused its alleged market dominance as a search engine by giving an illegal advantage to its comparison shopping service.
According to the Commission, Google is dominant in the search engine market by providing search results to consumers who pay for the service with their data.
In 2004, Google also entered the separate market of comparison shopping in Europe, with a product that was initially called “Froogle”, re-named “Google Product Search” in 2008 and “Google Shopping” since 2013. It allows consumers to compare products and prices online and find deals from online retailers, including online shops of manufacturers and platforms (such as Amazon and eBay) and other re-sellers.
On the basis of a Google’s internal document, “Froogle simply d[id]n’t work”.
Ther
efore, according to the Commission, from 2008 Google began to implement in the European markets a change in strategy to push its comparison shopping service on the basis that consumers click far more often on results that are more visible by appearing higher up in Google’s search results. In particular, the Commission states that Google “has systematically given prominent placement to its own comparison shopping service” by displaying its product at or near the top of the search results when a consumer enters a query into the Google search engine.
In addition, it is alleged that rival comparison shopping services, that appear in Google’s search results on the basis of search algorithms, have been “demoted”. In the words of the Commission, “even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions”.
Therefore, the Commission asserts that since the beginning of each abuse Google’s comparison shopping service has increased its traffic in many European markets (e.g., 45-fold in the United Kingdom, 35-fold in Germany, 19-fold in France, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy). In addition, following the demotions applied by Google, traffic to rival comparison shopping services is alleged to have dropped significantly.
In addition to the fine, the company must also end the conduct within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.
The memo of the Commission’s decision is available here: Google Shopping
