To bolster shopping on its platform, Google engaged in antitrust behaviors that harmed competition, the European Commission ruled in 2017.
On Wednesday, the European Union’s General Court upheld the decision, knocking down the search giant’s appeal and leaving the company on the hook for 2.4 billion euros ($2.8 billion USD).
The EC initially fined Google for breaking antitrust law, determining that its search engine showed preferential treatment of its own comparison shopping services over rival services. Google appealed the ruling, sending the case to the European Union’s second highest court, where it was dismissed.
According to a press release, “The General Court thus rules that, in reality, Google favors its own comparison shopping service over competing services, rather than a better result over another result.”
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The company gives its own shopping services more favorable display and positioning, the GC said, and “while relegating the results from competing comparison services in those pages by means of ranking algorithms, Google departed from competition on the merits.”
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The $2.8 billion at stake is no small matter. But it’s still just a sliver of Alphabet’s revenue, which amounted to nearly $183 billion in 2020, as well as Google’s online advertising business, which raked in $147 billion last year, or more than 80 percent of the search giant’s overall take.
Of course, Google disagrees with the decision nonetheless, arguing in a statement that “our approach has worked successfully for more than three years, generating billions of clicks for more than 700 comparison shopping services.”
Shopping has become a key revenue generator for many major technology companies, especially those whose vast coffers hinge on online advertising, as commerce efforts tend to be folded under their ads business. That’s become a driving force for players like Alphabet’s Google and Meta Platform’s Facebook, and a growing imperative across other media and social platforms.
The ruling may reverberate across Silicon Valley, as antitrust concerns continue to spur demands for regulation and oversight of large technology platforms.
On Tuesday, a U.S. federal court in California nixed Apple’s request to delay required changes to its App Store, following an Epic Games v. Apple decision mandating the iPhone maker to allow in-app links to external websites.
The move opens the door for alternate payment systems, which would represent a massive shift in the economy of the App Store and how iOS in-app payments work. Apple demands the use of Apple Pay, a mechanism that comes with a requisite 30 percent cut. The company has until Dec. 9 to make the change.
Since the policy only covers digital goods and services, not physical products, the realities of this case have always seemed somewhat removed from the retail domain. But that’s poised to change, with the rise of NFT digital fashion and other virtual items, marketplaces that cater to them and brands’ growing fascination with all things metaverse. The entry point for some of this virtual commerce momentum is gaming, as the plethora of fashion partnerships with Epic’s Fortnite, Roblox and the like suggest.
This summer, European and British regulators saw fit to launch two antitrust probes into Meta, then known as Facebook, over whether it used a massive trove of data from advertisers to give its own Marketplace offering an edge over competitors. Amazon is reportedly in talks with the European Commission officials to settle charges that it leveraged its size and data to unfairly promote its own products at the expense of third-party merchants in its own marketplace.
That just scratches the surface, as global scrutiny intensifies. Active probes, cases and rulings rail against anticompetitive practices that would stifle rivals and harm consumers, ringing out from the United States, China, India, Australia, Russia and Latin America.
Investigators are looking at an array of issues, from Google News to Facebook Dating, but matters related to shopping obviously cut to the heart of consumer protection. This focus appears to be ramping up during a time when the tech sector is prioritizing retail and commerce, putting it squarely in a number of crosshairs.
Whether such actions hobble the platforms that brands and merchants increasingly rely on, per Big Tech’s point of view, or wind up benefiting retailers and consumers alike — the position of trust-busting officials — a lot may depend on how well legislators understand the tech platforms they aim to regulate and what enforcement looks like.
Margrethe Vestager, the EC executive vice president in charge of competition policy, was the key force behind Europe’s General Data Protections Regulation, and she’s now leading the charge to reshape EU laws to treat the technology industry like the banking and transportation sectors. She appears to find kinship with U.S. Federal Trade Commission chair Lina Khan, a longtime critic of Big Tech.
“She brings, I think, something that is both within the tradition of the FTC but also that shows that there is a readiness to push enforcement,” Vestager said in a media interview in July, about Khan. “And I think in that respect, there is an alignment of thinking between us, hopefully something that will inspire throughout the planet in every democracy.”