World’s internet giant Google was fined by the European Union’s antitrust regulators with a huge 2.7 billion dollar fine on Tuesday over search results. Google’s parent company was actually fined to the tune of 2.42 billion Euros, and we’re talking about Alphabet Inc. The accusation from European regulators is that Google favors its own comparison shopping service companies in the detriment of its competitors. The EU now demands from Google to treat its competitors equally under punishment of new fines presumably, i.e. to drop its bias in search results.
The record fine comes in the aftermath of a 7 year long investigation into the tech giant’s search behavior and if Tuesday’s ruling creates a precedent that sticks, other large internet companies may be forced to re-design their profit schemes. EU regulators fear that other companies as influential as Google, the likes of Amazon or Facebook, companies that created quasi-monopolies into directing consumer traffic by becoming gateways of the internet or simply became too big to allow any other competitors in their niche, may take unfair advantage of their privileged position. Google already announced it will appeal EU’s decision, while European Union’s antitrust boss warned that big internet companies also have responsibilities, other than making profit for their shareholders:
“They are not allowed to abuse their power in one market to give themselves an advantage in another,”
“In Europe, companies must compete on the merits regardless if they are European or not. What Google has done is illegal under E.U. antitrust rules.”
Google handles more than 92 percent of global internet searches and when it comes to product related searches, say smartphones, the giant search engine usually returns a series of “sponsored” ads on top of the search results, which obviously link to retailers’ websites. And each time such a sponsored link is clicked by an user, Google gets paid. As Google expanded its own shopping services in recent years, other merchants saw their income drop significantly, as sponsored links to their shopping sites are obviously put way lower than Google’s own, thus making for an “illegal advantage” according to EU regulators.
Google has 90 days to comply to the EU order which asks for treating rival comparison shopping services equally with regard to its search results, else it will face hefty penalties.
However, I think the EU bureaucrats are missing the real crime. Google is probably defrauding the businesses who actually buy clicks from them. The price you pay is determined by a blind auction and whatever Google decides based on your “relevancy”.
You basically give Google a pot of money to bid for ads and phrases and then they keep track of it for you and let you know when it is all gone. Nobody can really validate clicks (which can be spoofed fairly easily) or if the price Google charged you was appropriate. Because they have a virtual monopoly on search it is whatever they say it is. Name another business you would trust with that type of power.