June 27, 2017, the European Commission imposed on Google the biggest penalty in the history of the EU on the violation of antitrust laws. Being a trendsetter in the Antimonopoly Policy, its decision on the Google Commission will clearly set the tone for increased attention to the behavior of online platforms by the antimonopoly authorities and it is clear that the Antimonopoly Committee of Ukraine will NOT be left out – it’s only a matter of time
Advisor to the law firm Redcliffe Partners
June 27, 2017, the European Commission fined Google for 24.2 million euros for abusing the dominant position in the EU market. This is the biggest fine in the history of the EU in violation of antitrust laws. Remember, the old joke “The best place to hide a corpse – the second page of Google search results”? A violation of Google in part about this – taking advantage of the dominant position in the Internet search market, Google promoted its own price comparison sites (Google Shopping and its counterparts) into the front ranks of search results, “hiding” competitors’ sites for price comparison services at the bottom of the search.
How it was
In 2004, Google launched a price comparison service for products called Froogle (since 2008, the service has been renamed to Google Product Search, from 2013 – to Google Shopping). This service operates in 13 EU countries and allows you to compare prices among all types of online merchants, including manufacturers’ websites, online platforms such as Amazon and eBay, etc.
Since 2008, Google began to promote links to Google Shopping in the first line of Google search results, bypassing the standard algorithm, which was applied to other companies.
Thus, the sites of competitors Google Shopping displayed below in the search results – even the most ranked competitors on average fell on the 4th page of search or below. This practice Google has been applying since 2008 in Germany and the UK, gradually introducing it in each of the 13 EU countries, where the service of comparing prices for Google products.
The picture from the press release of the European Commission demonstrates how Google used its dominant position in favor of its own price comparison services
Since 2009, the European Commission has begun to receive complaints about such Google actions from competing price comparison service providers such Foundem, eJustice and Ciao.
The investigation of the European Commission began in 2010, and gradually Microsoft and a number of other American companies, including Disconnect, Inc., joined the “anti-Google campaign”. , Getty Images, Inc., Oracle Corporation, Trip.com, Yelp Inc., which supported the charges against Google.
What is the harm to competition?
The European Commission acknowledged that Google occupies a dominant position in the Internet search market in the EU – in most EU countries, Google’s share exceeds 90%. According to the European Commission, distorting the algorithms of displaying search results in favor of their services, Google managed to increase Google Shopping traffic 45 times in the UK, 35 times in Germany, 19 times in France. At the same time there was a sharp drop in traffic in individual Google Shopping competitors, for example, by 85% in the UK, 92% in Germany and 80% in France. This significantly affected the positions of competitors, because it is the traffic volume directly affects the profitability of the sites: the more traffic the site attracts, the more sellers want to place their products on it.
According to statistics, about 95% of all views fall on the first 10 Google search results, including 35% of views on the first search result. The first result on the second page of Google search is less than 1% of the views. Thus, Google’s promotion of its price comparison sites in top search results created unreasonable competitive advantages for Google Shopping compared to similar services. At the same time, consumers also suffered, who received garbled search results on their request to Google.
What are the consequences of the decision of the European Commission for Google
Google imposed a fine of 2.42 billion euros have already caused a lot of criticism in the media about its insignificant extent on Google – the penalty was only 2.8% of last year’s Google turnover of 86.4 billion euros.
But the penalty is only the tip of the iceberg – the company is also obliged within 90 days to stop the violation, including by applying the same algorithms to produce Google search results both for their sites and for competitors’ sites. It is expected that this commitment, and not the fine itself, will most significantly hit Google, because to implement the company’s decision it will be necessary to change its business model and offer the European Commission new algorithms to objectively display the sites of competitors Google Shopping in the search results. Also, the company is threatened with a wave of lawsuits from affected companies to recover damages from Google’s illegal actions.
At the same time, it is expected that the European Commission’s recognition of the dominant position of Google will speed up the investigation of two other cases opened against Google: on suspicion of imposing