Google has been fined a record $2.7 billion for a breach of E.U. anti-trust rules.
The search giant was charged with giving “illegal advantages” to another Google product within search results in a case that started more than seven years ago. The case relates specifically to Google Shopping, Google’s increasingly profitable shopping comparison engine.
This fine dwarfs the previous record fine for the abuse of a monopoly, doled out to Intel in 2009.
The E.U. commission arrived at the figure by taking a percentage of Google’s revenue from its Shopping product across the 13 European countries in question since 2008.
Should Google fail to comply with the terms set by the E.U. within 90 days, they will be fined 5 percent of the daily turnover of parent company, Alphabet.
“What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on their merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation,” stated Margrethe Vestager, the E.U. competition commissioner.
The wider implications of this ruling
The bigger questions now surround the precedent that this sets. There is a general consensus that the industry requires independent regulation, but that will be a lot trickier than it seems. Google would be loathe to reveal its closely guarded algorithms.
Moreover, we are moving into an era where they may start to lose full transparency over the inner workings of their products.
With Google – and all of its main competitors – moving their focus towards unsupervised machine learning algorithms, how exactly will they comply with these regulations? It may become impossible to prove the non-existence of bias in such a complex system in constant flux.
The likes of Facebook and Amazon will surely see this as the E.U. making an example of Google. However, they may have cause for concern too.
Google’s position as a search engine sets it apart, as consumers trust that the results have been ranked based on their quality. A 2014 study in India showed the persuasive power that Google holds, and this is one it is adjudged to have abused to the detriment of European consumers.
Facebook and, in particular, Amazon, strive to dominate the e-commerce advertising market. Any potential abuses of their increasingly strong positions will be watched very closely, by both the E.U. and Google.
Although companies like Amazon operate on different business models to Google, they are still moving towards a ‘machine learning first’ approach and will want to solidify their dominant position as the number one online shopping destination.
With the E.U. taking such a firm stance now, it seems unlikely they will relent and accept that their algorithms are making unbiased decisions.
What happens next?
Google has the right to appeal, which could extend the case by another 5 to 10 years. Intel, for example, is still fighting its fine from 2009 in European courts. However, even if Google should choose to appeal, it will still need to provide proof that it has changed its business practices in line with the court’s ruling within 90 days.
Google remains under investigation by the E.U. for giving similar advantages to two other Alphabet products, Android and AdSense.
For more Google vs. the EU, check out our previous news story: When is a search engine not a search engine? When it’s Google, says the EU
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Author: Clark Boyd