Google’s European fine is an important precedent

The decision by the European Commission to impose a €2.4 billion fine on Google for breaking competition rules is a landmark move. The US giant wrongly favoured its own shopping service for those using the Google search engine, the commisison concluded. The outcome of two further investigations by the commission into other areas of Google activities are still awaited.

Google has “respectfully” disagreed with the decision, which follows an often-acrimonious seven year investigation, and is likely to appeal to the European courts. The commission accuses Google, part of Alphabet, of unfairly directing traffic to shopping sites that pay for top placement on its search results pages and of not giving other competitor sites an equal chance. It has called on Google to change the way it displays these search results within 90 days or potentially face further fines. However, Google can choose to appeal, which could delay a final decision for some years.

The decision, the first of its kind, is important for a number of reasons. The first is that EU Competition Commissioner Margrethe Vestager is setting down a marker that the commission will act in policing competition rules in this key sector. Given that most of the big players are American, this may increase trans-Atlantic tensions.

The decision also sets down an important marker about the use by industry giants of their platforms to promote their own range of products and services. The big players may argue this is only natural market behaviour. But, for example, in the case of Google, which attracts some 90 per cent of EU internet searches, it does seem appropriate that controls are in place to allow competitors relying on traffic volumes a fair opportunity.

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It will likely fall to the European courts to decide whether the remedy and fine proposed by the commission are appropriate. Regulating the competition activity of such major multinationals – whose operations cross jurisdictions – is hugely complex. The Google decision sets an important precedent, however, with implications for the operations of many major tech players.