The EU's £2bn Google fine is just unfair

UPDATE: The European Commission's record fine opens the door for further legal action.

by Adam Gale
Last Updated: 27 Jun 2017

Google’s an all too easy target. Enormous, American, a bit weird, has a very clever tax accountant – of course the European Commission was going to go after the Silicon Valley search giant.

Sure enough, commissioner Margrethe Vestager just announced a record fine of €2.4bn (£2.1bn) for alleged abuse of monopoly position, following a seven-year investigation into Google’s shopping adverts.

'Google has abused [its] market dominance by giving its own comparison shopping service an illegal advantage,' the Commission said.

To give you an idea of what this involves (and because we like smoothies), MT decided to search for a blender. As you can see from the screenshot below, Google serves results from its Shopping service on the right of the page, which take you directly to retailer sites. The top organic search results, such as Argos and John Lewis, come further down the page.

There are two key questions here: 1) does Google have a monopoly on blender shopping searches; and 2) does this monopoly unfairly disadvantage competitors?

Google isn’t actually a monopoly

Yes, 90% of internet searches in the EU are via Google, but consumers don’t have to use Google exclusively when looking for products online. As the company has itself pointed out, the most common route is actually for people to search on Amazon or possibly eBay, while lots of people go directly to big retailers.

Besides, there’s always Bing. If consumers believed that Google’s searches were returning poor results or too many adverts, it would take them less than a second to switch. (As it happens, if you type ‘food blender’ into Bing, you get almost exactly the same layout of adverts and organic search results, except for some reason Microsoft thinks we’re in the United States.)

Who is being disadvantaged here?

Even if you think Google does have a monopoly, it’s not immediately clear who’s being unfairly discriminated against.

You could argue it’s the retailers who appear in the search results, because they are effectively losing customers to the retailers paying for adverts. Alternatively, it's the customers who don’t see the best options because of the ads.

But you cannot expect Google to provide its invaluable search function for free. We are able to search only because Google (and Bing) sell adverts against those searches – this is no different when searching for a blender as when searching for something more abstract like a poem. Besides, Google isn’t a retailer, so it’s not unfairly disadvantaging its own competitors.

The real losers are, as Vestager said, the price comparison and review sites. They could argue Google is muscling in on their turf by poaching lead generation income, and the EU has shown how their business has suffered since Google Shopping adopted its current strategy.

But even here it doesn't seem entirely fair to call Google a competitor. People go to price comparison and review sites to, well, read reviews and find the best deals. Google Shopping results are paid for by retailers, which really means it's a form of advertisement more than a price comparison service per se. 

It’ll happen anyway

Clearly the EU doesn't agree. In some respects, the real value of slapping Google with a huge fine is to score political points - one for the little guys against the all-consuming American giant. As a result, whether justified or not, Google will still have to pay, subject to an almost inevitable appeal before the European Court of Justice.

In the meantime, we can expect challenges in the civil courts from disgruntled competitors, all of which could drag on for years, as well as further action from the EU over alleged monopoly abuse over Android and other Google services. Anyone know how to find a good anti-trust lawyer?

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