Google Fined $2.7 Billion: Dark Clouds On The Horizon?

Jovan Djordjevic  Follow

Anyone who has ever been issued a parking ticket would certainly understand the soaring levels of anger, frustration and overall anguish that such a fine can elicit. People’s reactions to these sorts of unwelcome gifts can range from mild protest and attempted pleas of innocence – to outright rage culminating in a scuffle with courtroom officials. But, no matter what the reaction, a settlement is usually always reached and the fines are paid in full. 

When translating this scenario from the world of mere mortals into the realm of corporate fines, things get much more complex – and the stakes are far greater. Instead of being measured in the tens and hundreds of dollars, penalties for seemingly minor offences can often reach heights of millions and even billions.  

This was recently the case with Google. Last month, the global tech giant was ordered to pay a staggering fine of €2.4 billion ($2.7 billion) by the European Union’s antitrust watchdog.

This marks, by far, the biggest penalty that the regulator has issued to date, and has created a new precedent with potentially wide-ranging consequences for both the tech and financial sectors.

The fine follows the conclusion of a seven-year investigation into antitrust practices by Google’s European business. The company is accused of distorting the market by giving an unfair advantage to its online shopping feature (Google Shopping), through promoting it at the expense of alternative providers.

According to Margrethe Vestager, the EU’s competition commissioner, “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.” She went on to reaffirm that what Google has done is illegal under EU antitrust rules.

In a direct response to the accusations levied against it, Google announced that it will review the commission’s decision in detail and consider an appeal. 

Whilst there is nothing unusual about multinational behemoths—such as Google—running into the occasional regulatory problem, the sheer scale of the latest EU fine points towards a worrying trend. Accordingly, we can observe the widening of a cleft between the interests of the EU on one side, and those of U.S. based tech giants on the other.

The move comes at a time of increased political tensions between Washington and Brussels. Unlike previous years of cooperation, the new agenda between the two power blocks seems to have diverged on many issues. With protectionism embraced as the new hallmark of the Trump administration in Washington, EU institutions and governments have lashed out at what they view as America’s backtracking on its global commitments. In such an unpredictable climate of tension and unprecedented shift in global policy, the news concerning Google’s situation does not come as much of a surprise. It can nonetheless serve as a potential indicator of things to come— particularly in relation to regulation. It is worth remembering that the fine issued is not the be-all and end-all of Google’s European woes. The company currently faces two ongoing antitrust investigations; one relating to its AdSense business, and another targeting its relationship with smartphone manufacturer Android. It remains to be seen how these will turn out.

Overall, the Google saga will undoubtedly ruffle feathers in the U.S. business world, but all is not gloomy, as there does seem to be a silver lining.  

According to Politico reporter David M. Herszenhorn, the latest EU technology decision should better be seen as a proxy for a debate about whether or not EU regulations are up to date. That raises the question of what sort of internet we want: a libertarian one, where innovators break things first and worry about the mess later? Or an internet that is mostly open, yet managed with assistance from regulator enforcement? 

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